Former Yahoo! China president Zhou Hongyi yesterday sued his former employer for defamation, demanding 3.6 million yuan (US$450,000) in compensation.

The former Yahoo! China president and chairman of website Qihoo.com yesterday released a statement saying that he had filed a suit to the Second Intermediary People's Court of Beijing against two Yahoo! associated companies and Yahoo! China General Manager Tian Jian.

"I have been bearing with the attacks from Yahoo! for the past three days," said Zhou in the statement.

Zhou said that Tian had attacked him and his company at a media briefing on Monday. He demanded Tian and the two Yahoo! associated companies issue a public apology  and pay 3.6 million yuan in compensation.

On Monday, Tian accused Zhou of unethical business conduct. He said that during Zhou's tenure with Yahoo! China he had signed contracts favouring companies he controlled.

Tian also said that when Zhou left Yahoo! China last year, he encouraged former colleagues to work in his own company using technologies developed by Yahoo!.

Zhou became president of Yahoo! China when the US Internet giant acquired his firm Beijing 3721 Technology Ltd for US$120 million in 2003.

He left Yahoo! China in June last year to become chairman of Qihoo.

On July 28, Qihoo launched an anti-hooligan software campaign. The primary target was Yahoo! Assistant, which was actually invented by Zhou as 3721 Assistant and acquired by Yahoo!.

Yahoo! China fought back with a media briefing on Monday. It said yesterday it would launch a counterclaim against Qihoo and Zhou.

The legal spat between the former and current Yahoo! China chiefs is likely to drag on, but the conflict has more to do with commercial interests.

The core function of the former 3721 Assistant, now called Yahoo! Assistant, is a search engine, which helped generate as much as 200 million yuan (US$25 million) before Zhou left the company, according to his statement.

Qihoo, which has a search engine service for online forums, also regards searching as core business and wants to attract the interest of the sales channels of other search engines, especially Yahoo! Assistant.

Yahoo! Assistant, which has the highest usage in China of such software, would be an ideal target; and Zhou's familiarity with Yahoo! China would also allow Qihoo to develop strategies against its rival.

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