Weibo: Qihoo Takes High Road Against Baidu, Tencent, Xiaomi

Dec. 5.13 | About: QIHOO 360 (QIHU)

Top executives at controversial software security maker Qihoo 360 (NYSE:QIHU) have been blitzing cyberspace these past few days with a campaign to convince the world that it’s suddenly become a defender of justice and occupier of the moral high ground. This sudden offensive almost looks coordinated, with Qihoo aiming its newest assaults at 3 of its favorite targets, search leader Baidu (NASDAQ:BIDU), top social networking firm Tencent (OTCPK:TCEHY) and fast-rising super-cool smartphone maker Xiaomi.

I’ll start off by saying I highly doubt the sincerity of Qihoo’s new attempt to convince the world of its new virtuosity. I wrote earlier this year that perhaps the company was opening a new chapter after it signed a major government contract, in an attempt to break with its past reputation for underhanded and even illegal business tactics. (previous post) But I’ll admit my analysis was premature, and Qihoo will have a very hard time changing its reputation under its current leadership.

All that said, let’s look at the latest inflammatory words coming from this “Strange Tiger”, which is what Qihoo means in English. We’ll begin with Qihoo’s chief himself, the outspoken Zhou Hongyi, who tried to soften his tone last week with words of thanks on his Sina (NASDAQ:SINA) Weibo on the U.S. Thanksgiving Day holiday. (microblog post) In his somewhat bland post, Zhou thanks Qihoo’s loyal users, as well as competitors that force his company to continually improve itself.

Zhou is not quite so benevolent in another post, which is really a re-post from an official Qihoo account criticizing monopolies that stifle innovation. (microblog post) Anyone who follows the company will know that’s a reference to Qihoo’s lawsuit against Tencent, which is being heard on appeal in Beijing after a Guangdong court ruled in Tencent’s favor earlier this year. While Zhou was circumspect about the case last week, his vice president Qu Bing was a bit more vocal with a couple of rants that directly blasted Tencent for operating a monopoly in the instant messaging space. (microblog post)

Frankly speaking, I’ll admit that I tend to side with Qihoo in this case. Tencent really does have a stranglehold on China’s instant messaging market, first with its popular QQ desktop product and now with its equally popular WeChat mobile service. It will be interesting to see what the courts rule this time in Beijing, which is far removed from the courtroom in Tencent’s home province of Guangdong where the original hearing took place. I wouldn’t be surprised to see the Beijing court rule at least partially in Qihoo’s favor this time.

Outside its Tencent feud, Qihoo also had sharp words for Baidu. In this case the words came from another top company manager Wang Erfei, who posted a mini tirade accusing Baidu of using underhanded tactics to smear Qihoo’s name. (microblog post) This kind of accusation is somewhat ironic coming from Qihoo, which is famous for similar practices. It’s also part of a recent feud that includes a string of lawsuits between the 2 companies, including one in October where Qihoo accused Baidu of unfair competition. (previous post) The subtext to all this is that Qihoo last year launched one of the first serious assaults in years on Baidu’s industry-leading search business, and now the pair are fighting a dirty war for dominance in the space.

Last but not least, Qihoo also leveled criticism at Xiaomi, with the assault this time coming from Qihoo analyst Mi Xiaobin. In his post, Mi is critical of Xiaomi’s recent entry into the wireless router space. (microblog post) His post implies that Xiaomi is simply copying a similar move earlier this year by Qihoo, which launched its own routers in June. (previous post) It’s slightly strange that Mi seems to criticize Xiaomi’s low price tag of 799 yuan ($130) for its routers, since Qihoo’s own routers reportedly were selling for just 99 yuan. But Qihoo isn’t always a logical creature, and it’s quite possible this strange tiger is worried that wireless web surfers may prefer Xiaomi’s “cool” image to Qihoo’s reputation as a stealthy and often ruthless predator.

Disclosure: None