Yesterday, China’s Qihoo 360 took another blow from the country’s legal system: the Supreme People’s Court has rejected Qihoo’s appeal of the initial verdict of a Tencent lawsuit against Qihoo for unfair competition, and has ordered Qihoo to pay Tencent a sum of RMB 5 million (about $800,000).
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It’s easy to get confused about this case because Qihoo is involved in so many other lawsuits, and because the initial dispute at the heart of this Tencent-Qihoo suit dates back years, to the so-called 3Q war, a dispute between the two companies that saw each accusing the other of foul play and using their software to block users from accessing the other’s software. That happened back in 2010, and since then, the lawsuits have been flying. Yesterday’s decision should put the matter to rest (at least from a legal perspective) for good.
At this point, one has to imagine that Qihoo has gotten used to it. For a confrontational and litigious company, its record in Chinese courts is pretty abysmal. In addition to a bunch of losses to Tencent (yesterday’s ruling was the final in a series of unsuccessful appeals), the company has also lost a major suit against search rival Baidu. Qihoo is also in the process of suing a major national newspaper and Sogou.
Perhaps I am naive, but I do not understand this aspect of Qihoo’s PR strategy. And make no mistake, this is a PR strategy; the damages being awarded in these cases are chump change for companies like Qihoo and Tencent, which have millions of users and dominate entire sectors of China’s internet. But I have yet to see an example of Qihoo’s confrontational court strategy producing any result other than embarrassment. And each time the company appeals a decision only to have a higher court confirm that it is in the wrong, the embarrassment is prolonged.
Qihoo’s PR approach isn’t just confrontational in the courts, either. The company’s CEO Zhou Hongyi has a well-deserved reputation for bluntness and a willingness to stir up disputes with competitors. It has even apparently made an enemy of Apple, which de-listed Qihoo’s apps from the App Store last year，although they’re still available via third-party app stores to operate on jailbroken iPhones, which are common in China. (As of this writing, one Qihoo app is available in international App Stores, but there are still none available in China).
Zhou also has ambitions of taking Qihoo 360 global. In fact, he wants Qihoo 360 to be “the biggest web security company in the world.” But this latest legal loss is a reminder that attaining that kind of dominance outside of China is going to take quite a bit of work. The lawsuits-for-everyone strategy isn’t going to engender much good will overseas, and Zhou’s blustery approach is likely to ruffle just as many feathers outside the Middle Kingdom as it has inside.
Qihoo has succeeded in China in part because its products work, and in part because it has managed to make many of Chinese web users’ decisions an us-or-them proposition. After the polarizing 3Q war, the company has some devoted fans, and in a lot of its sectors it faces only one or two major competitors, so consumers don’t have a lot of choice.
But on the global market, Qihoo would face users who already have an abundance of choices, and who aren’t likely to be attracted by the company’s confrontational PR tactics. Make no mistake: Qihoo is already a giant company, and it can and probably will get bigger in China. But if it truly wants to go global, something is probably going to have to change.