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Chinese government slams firm for anti-competitive practice

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China's government has slapped fast-growing Chinese web firm Qihoo with a warning for unfair competition, alleging the firm used its security software to trick users into downloading its browser.

The warning(via TechInAsia), handed down last week, has been made public by China’s State Administration for Industry and Commerce (SAIC). The Administration says Qihoo made it's popular free security software 360 Safeguard difficult to uninstall. The software also offered warning messages claiming browsers other than Qihoo's own were either incompatible with users’ systems or unsafe.

The notice also claims that in August last year 360 urged users to download what it falsely claimed was a critical Microsoft IE patch - KB360018. When users clicked through they were apparently forced to install Qihoo’s 360 browser product.

The bad news for Qihoo was compounded last week when Apple decided to remove its apps from the iTunes store.

NYSE-listed Qihoo is one of the fastest growing web firms in China, aggressively going after the browser and now search market with outspoken former Yahoo! China CEO Hongyi Zhou at the helm.

Last year Qihoo removed Google as the main search option on its hao.360.cn portal, replacing with its own so.360.cn search service. This move helped propel it to a distant second spot behind Baidu in China’s search market with Google trailing in fourth spot.

The government warning is not the first time Qihoo has been accused of dirty dealings.

Anonymous Analytics – the research arm of the hacktivist group – accused it of deliberately overstating the volume of traffic to hao.360.cn in order to attract advertisers.

Mark Natkin, managing director of Beijing based consultancy Marbridge Consulting, told The Reg that although Qihoo has had some pretty bad press of late, it’s certainly not alone in employing shady business practices.

“Most of China's leading internet firms push the regulatory envelope - Qihoo is particularly aggressive and adept at it - and periodically get brushed back off the plate by the authorities,” he said. “The good ones know when and how much to pull back to avoid serious penalties.”

Google is probably watching these developments with interest, as Bloomberg recently reported it is co-operating on a partnership that will see Google ads run alongside Qihoo search results. ®

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