Court rules in favor of Tencent against Qihoo

Qihoo 360 Technology Co Ltd, a leading free anti-virus software provider, used unfair competition against China’s largest Internet company Tencent Holdings Ltd, a court ruled on Thursday.

Qihoo was ordered by the Higher People's Court of Guangdong Province to pay 5 million yuan ($810,240) in compensation to Tencent for its violation of business rules, and publish apology notices on its company homepage, as well as on news portals such as sina.com and sohu.com.

Qihoo said it would file an appeal to the higher court.

As maker of the security software 360 Safeguard, Qihoo’s market dominance was severely challenged in 2010 when Tencent released a similar program QQ Doctor and bundled with its instant messaging service QQ.

In September 2010, Qihoo accused Tencent of invading users’ privacy through the use of QQ Doctor, saying the software was being used to scan and monitor users’ information.

As retaliation, Qihoo launched its security software called “Koukou Bodyguard” in October 2010 to offer more privacy to users and speed up QQ. But Tencent claimed that the software could cause QQ to malfunction.

The dispute forced millions of users to take sides in the following month, when Tencent announced it would shut down the QQ instant messaging service on computers that had installed Qihoo’s security software.

Tencent lodged a suit against Qihoo in late 2010, accusing Qihoo’s of malicious slander and unfair competition.