Tencent, Sohu Accuse Baidu of Infringing Video Copyrights

Chinese online-video providers Tencent Holdings Ltd. (700) and Sohu.com Inc. (SOHU) said the owner of China’s largest search engine, Baidu Inc. (BIDU), infringed copyrights by providing access to pirated content.

Some material on Baidu’s video search, Baidu Yingyin, Baidu Video App and Baidu TV Stick is available without authorization, companies including Tencent, Sohu and Youku Tudou Inc. (YOKU) said today in a joint statement.

Chinese online video companies spend billions of yuan annually on content as they compete in a market that consultant IResearch estimates may generate 16.2 billion yuan ($2.7 billion) in advertising revenue next year. Pressure to comply with intellectual property rules has increased for the publicly traded companies.

“The video industry now has walked to the crossroads,” Charles Zhang, chairman and chief executive officer of Sohu, said in an e-mailed statement. “If we let such industry malpractices continue, it would be a devastating blow.”

Baidu values copyright protection and has blocked links to more than 5.8 million videos since June, Kaiser Kuo, a Beijing-based spokesman for Baidu, said in an e-mailed statement.

Universal, Sony

Youku Tudou sued Baidu in Beijing and Shanghai, Jean Shao, a spokeswoman for the company, said in an e-mail. Sohu also sued Baidu, Jiang Xin, a spokeswoman for Sohu, said by text message without elaborating.

Baidu agreed in July 2011 with Universal Music Group, Warner Music Group Corp. and Sony Corp. (6758) to pay owners of copyrighted material available on a social-music platform. Later that year, it was removed from the U.S. list of “notorious markets” known for sustaining piracy and counterfeiting of intellectual property.

Competition has intensified among China’s online video websites, with Suning Commerce Group Co. (002024) saying last month it would pay $250 million for a 44 percent stake in video website PPTV.com.

Baidu bought PPStream Inc. in June for $370 million and has been combining it with IQiyi.com to create China’s largest online-video platform. Baidu said it spent 222 million yuan during the second quarter for content.

Youku Tudou spent 289 million yuan in the same period.

Tencent, Asia’s largest Internet company by market value, also operates a video site at v.qq.com.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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