Recruiting in China

Sequoia and its lead venture capitalist Michael Moritz have got quite a tangle of interests over in China.

Yahoo China (operated by Alibaba.com) has filed a lawsuit against Sanjiwuxian, the owner of a Chinese search engine called Qihoo, on grounds of unfair competition. Qihoo is backed in part by Sequoia Capital.

Qihoo’s software has been telling users that Yahoo’s toolbar is malware and prompts deinstallation, according to the lawsuit, and has taken a cut of Yahoo toolbar’s market share. (Ironically, points out John Battelle, a search for “Qihoo” in Google produces the spelling correction “Did you mean: Yahoo?”.)

Sequoia Capital, an early backer of Google, where Moritz is on the board, helped pour $20 million into Qihoo, which we reported here. Google’s getting some indirect help here, if Qihoo is badgering Yahoo. Finally, remember that Moritz made his name by backing Yahoo. Eventually, he faced conflict while on the boards of both Google and Yahoo, and had to leave Yahoo’s board to resolve it.

Update: There’s an unconfirmed yet interesting comment below suggesting there may be more to this. And we forgot to mention Sequoia poached Fan Zhang, a former director of DFJ’s China operations, who’d helped invest in Baidu, the other big search player in China. So it is full circle.