Baidu-Qihoo Spat Heats Up 奇虎和百度硝烟再起

The unspoken war between online search leader Baidu (Nasdaq: BIDU) and challenger Qihoo 360 (NYSE: QIHU) is taking on a new wrinkle with word that Baidu may be trying to get its advertisers to stop using Qihoo’s popular web browser. I personally find this war of words quite entertaining, though I do also think that Qihoo could better spend its time focusing on doing business rather than accusing others of trying to thwart it through this kind of underhanded tactic. Qihoo, after all, is the master of the underhanded business tactic, which has resulted in numerous lawsuits and complaints being leveled against the company over the years.

So now that I’ve said all that, let’s take a look at the latest news, which to me looks like an extension of an unspoken war that first broke out last summer when Qihoo launched an online search product to challenge Baidu, the longtime market leader.

In this latest development, Qihoo is accusing Baidu of forcing its advertisers to abandon Qihoo’s popular web browser. (Chinese article) Qihoo says that Baidu’s advertising services web page no longer supports Qihoo’s 360 browser, meaning Baidu advertisers must use other browsers like Firefox or Microsoft’s (Nasdaq: MSFT) Internet Explorer to access Baidu’s advertising page.

Baidu is declining to comment directly on the matter, saying only that it doesn’t support certain web browsers that may pose security risks. Qihoo rose to prominence as a provider of free Internet security software, but ironically has also become famous for often adding back-doors and other unwanted elements to its software that are very difficult for consumers to uninstall.

So to return to our main story, I certainly wouldn’t be surprised if Qihoo’s Internet browser does indeed present security risks that Baidu would like to avoid. But at the same time, this move by Baidu, if true, does certainly seem like the latest offensive in the ongoing battle with Qihoo. That battle broke out over the summer when Qihoo launched its so.com search engine, posing the first major challenge in years to Baidu, which controls more than two-thirds of China’s search market.

So.com added a number of innovative features, such as integrated searching using multiple engines, to quickly gain market share, and now has about 10 percent of the country’s search market. Baidu has reportedly fought back by previously trying to discourage its customers from using some Qihoo products (previous post), and most recently talk has emerged that it may be looking to form an alliance to create a software security product to rival Qihoo’s.

Meantime, Qihoo has been forming its own series of alliances that look aimed at taking advantage of discontent in the online community about Baidu’s years of dominance in the online search space. That dominance has only grown over the last 2 years, after the market’s only other major contender, Google (Nasdaq: GOOG), shuttered its China-based search service in 2010.

Qihoo has said it will complain to China’s regulator about Baidu’s latest tactic to discourage use of the Qihoo 360 browser. I seriously doubt the regulator will agree to hear such a case, since it’s Baidu’s right to support or not support whatever web browsers it wants.

At the end of the day, this latest spat probably isn’t even that important as Baidu’s advertisers aren’t that numerous when compared with total Internet users, and those advertisers can still use Qihoo’s browser for their other web surfing. More importantly, the spat shows the war between Baidu and Qihoo is likely to continue for at least the next year. That war should see Qihoo make steady gains in the search space, as Baidu attempts to counterattack by taking aim at Qihoo’s other businesses.

Bottom line: The battle between Qihoo and Baidu will continue for at least the next year, with Qihoo gaining search market share as Baidu takes aim at Qihoo’s other businesses.

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