Internet giants Tencent, Qihoo 360 begin legal battle

Court proceedings began Wednesday for Qihoo 360 and Tencent, two Chinese Internet giants, with Qihoo 360 suing Tencent over the alleged abuse of its market dominance and unfair competitive practices.

Qihoo 360, a leading antivirus software developer, is seeking 150 million yuan (23.8 million U.S. dollars) in compensation from Tencent, China's largest Internet company.

A hearing on the case at the Guangdong Higher People's Court lasted for the entirety of the day, with no ruling handed down as of yet.

The court debate centered around three issues; namely, whether Tencent has a dominant market position, whether Tencent has engaged in unfair competitive practices and whether the compensation Qihoo 360 is seeking should be awarded.

The two companies have been engaged in a long and drawn-out legal war since 2010.

On Sept. 27, 2010, Qihoo 360 accused Tencent of invading the privacy of its users through the use of QQ Doctor, a security program developed by Tencent for use with its popular QQ instant messaging service. Qihoo 360 claimed that Tencent has used the software to scan and monitor its users' personal information.

Following the complaint, Qihoo 360 released its own security software called "Koukou Guard" on Oct. 29, 2010, claiming it could speed up QQ and offer more privacy to its users. However, Tencent responded by warning its users that the "Koukou Guard" could cause QQ to malfunction.

The dispute escalated when Tencent said on Nov. 3, 2010 that it would shut down the QQ instant messaging service on computers that had security software created by Qihoo 360 installed on them.

Although both companies apologized to Internet users after being ordered by the Ministry of Industry and Information Technology (MIIT) to stop squabbling, the war between the two Internet giants had already triggered a public outcry.

The MITT said in a statement in November 2010 that unfair competition between the companies, especially Tencent's move to unilaterally shut down its instant messaging service, had affected users and caused "bad social consequences."

Tencent has nearly 1 billion registered QQ users, while Qihoo 360, China's largest free anti-virus software provider, has 300 million clients.

Tencent also has a pending case against Qihoo 360 in which it is claiming that the "Koukou Guard" software is a form of unfair competition.

Tencent is demanding Qihoo 360 to stop developing and promoting the software and claiming 125 million yuan in compensation. The case has been accepted by the Guangdong Higher People's Court, although a court date has yet to be set.