Baidu and Qihoo 360 Fight Again


Everyone seems to have forgotten about the battle between Baidu and Qihoo 360 -- except for the two Chinese dot-com speedsters.

Qihoo 360 told investors yesterday that Baidu is using a plug-in that warns users of Qihoo 360's market-leading Internet browser that it is incompatible with Baidu's platform. It's the latest salvo in the battle between the two companies.

The two companies seemed to coexist in their core competencies -- Baidu as China's largest search engine and Qihoo 360 with its browser and popular suite of anti-virus software -- until Qihoo 360 replaced Google as its browser's default search engine with a homegrown offering.

Qihoo 360 began gaining market share. At last check it was at roughly 10% to 15% of the Chinese market, but that's substantial enough to worry Baidu and its commanding two-thirds chunk of search in China.

Investors have largely moved on. Baidu shares are up nearly 30% since bottoming out last month. Qihoo 360 hit another 52-week high earlier this month. Google shares have ignored the fracas, largely because it was assumed that the global leader had all but given up on China when it staged a retreat on principle a couple of years ago.

However, the fisticuffs continue to fly.

It's not just Baidu that Qihoo 360 apparently has a problem with these days. The Beijing-based company now has a beef with Apple . Qihoo 360's CFO claims that its apps were "abruptly removed" from Apple's iconic App Store last week. Qihoo 360 argues that the apps were booted for no apparent reason, but there's probably more to this story than meets the eye.

Qihoo 360 is making way too many enemies these days. Management was reportedly called in to the Beijing Industrial and Commercial Administration Bureau on a warning that incorporating its anti-virus software into its browser is anti-competitive.

It may seem to be raining on Qihoo 360 these days, but doesn't the swagger remind investors of Microsoft in its heyday?

Let's review the elements here.

  • Qihoo 360 is battling it out with the leading search engine.

  • Qihoo 360 is exchanging blows with Apple.

  • Qihoo 360 is being taken to task by regulators for using a successful platform to ram other products down the throats of its users.

Replace Qihoo 360 with Microsoft in any or all of those three examples and it makes perfect sense.

China's Internet has grown up so fast.

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Longtime Fool contributor Rick Aristotle Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, Baidu, and Google. The Motley Fool owns shares of Apple, Baidu, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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