"We have become very concerned about some false reports on Sina.com about Sohu and we are demanding an apology, or we may take legal action," said Sohu chief executive Charles Zhang on Saturday.

One of the reports centred on which portal was ranked first in the Chinese mainland by Interactive Audience Measurement Asia Ltd (IAMASIA), a famous Internet monitoring firm in Asia.

Sohu, which claimed it was the largest Internet portal in China from December 2000 to July 2001, accused Sina of making false statement when it claimed it was the largest in July.

An executive with IAMASIA said its ranking on Chinese Internet portals might vary from other measurements, so it was possible that the rankings might be different, but he declined to comment on the dispute before liaising with the company's Hong Kong headquarters.

Another accusation centred on a September 27 web story where Sina said that Sohu was being investigated by US law firm Charles J. Pevin for possible violations of its US federal securities laws.

Sohu chief operating officer Victor Koo said at a press conference on Saturday that such situations happened frequently in the United States, and accused Sina of deliberately exaggerating the matter to smear Sohu's reputation.

The other reason behind Sohu's demands for an apology came from another Sina report on September 28, which said Sohu's shareholders had registered to sell more than 8.8 million stocks of the business. And it claimed one of its biggest shareholder, Hong Kong Jade Bird Science and Technology Ltd, which owns more than 6 million Sohu's shares, would pull out of the company.

Victor Koo explained the report by saying: "The registration of selling shareholders is one of the obligations of Sohu to its shareholders and it does not mean that those shareholders will sell their stocks for definite."

He said Sina's reports had negatively impacted on Sohu - and demanded that Sina post an official apology on its website before mid-October, or face legal action.

He said Sohu's management had communicated with senior executives of Sina and its rival had made some changes to the reports on its website.

Sina's management was not available to comment on the matter, but the disputed reports about Sohu had been deleted.

An executive with Sina, who declined to be named, said the stories were not written by Sina and they were not even the first website to publish the stories.The opinions about Sohu were made by some analysts, making legal action improper.

"If Sohu does sue us, we will retaliate," said the executive.

Since most Chinese Internet portals operate in similar fields - and Sina, Sohu, and Netease are all NASDAQ-listed - competition is very fierce and any report about their rivals will become a focus on their websites.

However, some analysts have urged both parties to refrain from radical measures which would hinder the development of China's Internet industry.

(China Daily 10/01/2001)