Yahoo China Sued by Its Former General Manager

The former General Manager of Yahoo China, Zhou Hongyi, took Yahoo China to court on August 17 on a charge of "making public remarks to distort facts, insulting and libeling the claimant via various media". Zhou Hongyi currently acts as Chairman of qihoo.com and Angel Investor. He was also the founder of 3721.com, which was sold to Yahoo for US$120 million in November 2003. The Beijing No. 2 People's Intermediate Court has accepted the case.

This month saw the first anniversary of Yahoo's acquisition of Alibaba. Yahoo China, which is now part of Alibaba, unexpectedly established a column on the homepage of its website, accusing its former General Manager Zhou Hongyi of "intimidating and pressuring" staff into leaving Yahoo China. Yahoo China's remarks had a defamatory nature, which shocked insiders.

On August 16, Zhou Hongyi officially responded to Yahoo China's accusations at a press conference, enumerating eight strategic errors made by Alibaba and Yahoo China in the past year, including termination of their portal business, of their ysou.com search business, of their wireless business and of the 3721 brand. According to Zhou, these were the main reasons for the departures of the Yahoo staff. At present, those canceled businesses are being restored and Yahoo China will be back on course within a year.

Qihoo.com, founded by Zhou Hongyi jointly with Sequoia Capital, Matrix Partners and CDH, is a new generation search engine company. Established in September 2005, its business has grown rapidly in the past year and is currently the largest search engine in the global Chinese community. Not long ago, the company introduced free software for the public benefit -- an anti- spyware tool 360 safeguard, to help netizens find and kill "bad ware" -- i.e. Spyware and adware infecting their computers. According to a survey, over 90% of the netizens think that the real-name products of Yahoo Alibaba are "bad ware". Zhou Hongyi said: "Probably it's because the anti-spyware tool 360 safeguard affects Yahoo China's interests that they have launched this personal attack upon me."