In an action against an online portal for promoting the use of
malicious software, the plaintiffs -- a grassroots anti-rogue
software federation -- suffered a major blow on November 17 after a
Beijing court ruled in favor of the defendants.
Dong Haiping, leader of the Beijing-based federation, accused
Alibaba of forcing the installation of search software
Yahoo!Assistant onto his computer when he visited the website of an
Alibaba subsidiary, Yahoo!China, in August 2006. The software could
not be completely uninstalled and Dong claimed this caused his hard
drive to crash.
Malicious or rogue or hooligan software typically includes such
things as pop-up advertisements, spyware (which can allow others to
steal a user's personal information), trackware (which can allow
others to find out where a user lives and works), and other
software that could infect a user's computer with a virus.
Deciding in Alibaba's favor, the court ruled that Dong had
failed to provide enough proof that it was in fact Yahoo!Assistant
that damaged his hard drive.
This case was the first setback that Dong's federation suffered
since its establishment on September 4, 2006.
Others soon followed.
On December 18, the federation lost its suits against
Zhongsou.com, and against Oak Pacific Interactive, makers of Dudu
Download Accelerator.
Ironically enough, when search engine operator Qihoo.com
provided Internet users with instructions on how to uninstall the
Yahoo toolbar -- because it was deemed malicious -- using its
software, 360 Safeguard, Yahoo!China filed a lawsuit against Qihoo
for unfair competition, claiming that Qihoo misled users and marred
Yahoo!China's reputation in the process.
On December 20, the Beijing No. 2 Intermediate People's Court
ruled in favor of Yahoo!China, and ordered Qihoo's operator,
Beijing Sanjiwuxian Internet Technology, to stop its "unfair
competitive practices" and to pay damages and costs.
Zhou Hongyi, chairman of Qihoo, said that the verdict
demonstrates that hooligan software providers can make false
counterclaims, and win.
Taking the fight to the US
These setbacks haven't weakened Dong's resolve to continue the
campaign against rogue software makers and promoters.
"I will go to the US to open a second front for my cause, just
like the Normandy Invasion started the European Theater in WWII,"
Dong told reporters in Beijing on January 11.
Dong pointed out that all of the federation's five lawsuits in
2006 failed for two reasons: insufficient proof and a lack of a
legal basis.
According to Qihoo's lawyer, Yu Guofu, it is currently difficult
to collect evidence to prove the harmfulness of hooligan software
in China. Moreover, there is a lack of domestic legislation
regulating this aspect of IT.
In November, the Internet Society of China developed a standard
to categorize hooligan software. But it is only an industry
regulation and not state-approved law, which means that it cannot
serve as a legal basis for a claim.
"There is a good chance we will win the lawsuits in the US,"
Dong said. "Netizens who surf the Internet in Chinese in the US are
also bothered by hooligan software. But the difference is that in
the US, 18 states already have the relevant laws in place to punish
hooligan software providers, and another 18 or more are thinking
about doing so. This gives us a bigger hope for success."
Dong cited a recent case in the US that has fueled his
confidence. In November, the US Federal Trade Commission (FTC)
handed down a verdict against a company that provides Zango/180
Solutions adware, and ordered the company to pay a fine of US$3
million. The company reportedly tricked users into installing the
adware, which cannot be removed. According to the FTC, the software
was downloaded into more than 70 million computers in North
America, and unwanted advertisements popped up on screens more than
6.9 billion times.
"The legal environment and the methods of evidence collection in
the US are exemplary in Internet-related cases," Qihoo's lawyer Yu
said, adding that under a different legal system, the final result
could have been different. Countries like the US, the European
Union, South Korea and Hungary have enacted laws to restrict
hooligan and spy software, which can be used as legal references in
China.
Dong further explained that because legal costs in the US are
higher, his federation would be claiming for larger compensations.
In addition, tactics will be modified in that rather than bringing
a slew of claims against several rogue software providers at once,
as was done in China, the federation will focus its claims on a
select few in the US.
The federation is already in discussions with two US law firms
and the first suit is likely to be filed within the next two weeks.
The defendants have yet to be identified.
The question the industry is asking now is, "So what happens if
they win?" Commenting on the impact that any successful claim in
the US might have on the situation in China, Cao Lingxiang,
spokesman for Jiangmin SciTech, an anti-virus software provider,
said that it could provide a legal reference for the Chinese
courts, and could go some way towards controlling the hooligan
software force.
"Although we lost several lawsuits, the anti-hooligan software
initiative has taken root. Some big Internet firms have restrained
or even done away with the use of such software," Cao said.
Other changes have been even more significant. Oak Pacific
Interactive, makers of the Dudu Download Accelerator software,
closed the department in November; a Shanghai company, which
provided the user interface called Excellent Little Secretary and
relied on it to generate more than 10 million yuan of profits every
year, modified its use of pop-up advertisements; Zhongsou.com also
shut down its user interface department when it found out that the
federation was about to take action.
However, standing firm against the federation is Yahoo!China.
After winning three lawsuits -- two it launched for unfair
competition against Qihoo and AhnLab, a South Korean anti-virus
software provider, and one?the defederation launched against
Yahoo! China?-- the company is determined to redeem the
reputation of Yahoo! Assistant.
In the last two weeks, anti-virus software providers like Rising
Corp., Kingsoft, and Jiangmin have reportedly received legal
letters from Yahoo!China accusing them of having listed
Yahoo!Assistant and Alibaba's Network Real Name software as rogue
software.
But who are the real beneficiaries of the
campaign?
As the federation's frontman, Dong bears the brunt of criticisms
and dislike. Dong has also been blamed for having indirectly
promoted the use of Qihoo's 360 Safeguard, a move that hasn't sat
nicely with security software providers.
Qihoo could, therefore, be said to be one of the biggest
beneficiaries of the anti-hooligan software campaign. Its 360
Safeguard was installed in more than 12 million computers over a
period of just four months, and its user base is growing by about 3
million every month. As the same time, the fledging company, which
was set up less than one and a half years ago, has garnered venture
capital investment totaling US$50 million.
Riding on Qihoo's success is anti-virus software provider,
Kaspersky, which has its program embedded in Qihoo's 360.
The rapid increase of 360 Safeguard has affected the market
share of user-interface software makers and operators. Before 360
came along, Yahoo!Assistant had a market penetration of about 30
percent. Now, with examination from Qihoo, Rising, Kingsoft and
Jiangmin, that has dropped to about 10 percent.
Yahoo!China did not confirm the figure.
Another point being debated is whether or not companies actually
have the Internet users' interest at heart.
Analysts have said, "Anti-virus software providers are not happy
to be surprised with a new big rival (referring to Kaspersky),
therefore, they are not very active in the anti-hooligan software
move."
Jiangmin's Cao disagrees.
"Anti-virus software providers hope to purify the Internet space
in China, and Dong's federation has set an example. We will try our
best to support him."
(21st Century Business Herald, translated by
Yuan Fang for China.org.cn, January 18, 2007)