About 360 Security Technology

360 Security Technology Inc., through its subsidiaries, provides Internet services to the companies in the People's Republic of China (PRC). As of December 31, 2015, the company wholly-owned and majority-owned subsidiaries included · Qiji International Development Limited; Qifei International Development Co. Limited; 360 International Development Co. Limited; Qizhi Software (Beijing) Co., Ltd.; Tianjin Qisi Technology Co., Ltd.; Qifei Xiangyi (Beijing) Software Co., Ltd.; Tech Time Development Limited; and Mobi Magic (Beijing) Information Technology Co.,Ltd. As of December 31, 2015, the company also controlled variable interest entities under contractual arrangements. The major variable interest entities included Beijing Qihu Technology Co., Ltd.; and Beijing Star World Technology Co., Ltd. Products and Services Core Security Products The company’s core Internet security products are 360 Safe Guard, 360 Anti-Virus and 360 Mobile Safe. 360 Safe Guard is the company’s primary Internet security product and a one-stop solution for PC Internet security and system optimization. 360 Anti-Virus is an anti-virus application that uses multiple scan engines to protect the company’s users’ computers against all kinds of malware, including traditional viruses, and might operate without Internet connection. These applications protect its users’ computers against Trojans, viruses, worms, adware and other forms of malware. 360 Safe Guard and 360 Anti-Virus both consist of multiple integrated security products. Cloud-based anti-malware: The company’s centralized server cloud collects data, such as samples of malware, from its user base. These samples are sent to its cloud-based analytic systems for automatic real-time detection of new malware and updating of the blacklist and whitelist on a real-time basis. During on-demand scans on and real-time protection of the company’s users’ computers, its cloud-based anti-malware submits the digital fingerprints of files and Web pages from a user’s computer to its cloud query engines for malware detection. Any file that matches the company’s blacklist is immediately removed, quarantined or dealt with based on the user’s instructions, while a non-match to its whitelist is presumed to be suspicious and further analyzed by its other technologies. With approximately 500 million users reporting new and potential threats, the company’s user community contributes to its own protection. 360 Automatic Vulnerability Detection and Fix: Since most Trojan horses attack a computer through its vulnerabilities, 360 Automatic Vulnerability Detection and Fix assesses the security status of a computer and automatically identifies, downloads and installs suitable vulnerability patches. It is a tool for users to manage and safeguard the operating system and applications on their computers. 360 WebShield: 360 WebShield is an application for secure Internet browsing. Using a blacklist of malicious Websites compiled through the company’s user cloud and its server side detection system, 360 WebShield effectively blocks Websites that might contain automatically downloaded malware or phishing or fraudulent content and warn users against these Websites. 360 WebShield also filters advertisements, restores browser settings from and protects browser settings against unauthorized modification, scans downloaded files and maintains a stable browsing environment. 360 Privacy Protector: 360 Privacy Protector protects users’ personal information and data stored on the hard drive of their computers. By identifying the files accessed by software programs running on a user’s computer and allowing the user to decide whether to grant access, it protects its users’ private files, including chat records and online banking information, against unauthorized access. In addition, with 360 Privacy Protector, the company’s users could monitor the status of Webcams on their computers to prevent peeping, utilize a strengthened and encrypted virtual drive to store their private and sensitive files with minimized risks of data loss or leakage and clear unwanted access history or records. Quick PC Health Check: Quick PC Health Check is a tool to monitor, diagnose and rate the security status and performance of a user’s computer. 360 Mobile Safe: 360 Mobile Safe is a security program for the Google Android, Apple iOS and Windows Phone smartphone operating systems. It scans for malware using the company’s cloud-based security technology, blocks spam text messages, filters incoming phone calls based on user-input blacklists and whitelists, optimizes phone performance and speed and encrypts data for privacy protection in the event that the phone is lost or stolen. As of December 2015, 360 Mobile Safe was used by approximately 868 million smartphone users in China. Cloud Storage The company’s cloud storage system offers users a space for file storage and the data backup. User data is encrypted and stored on the company’s cloud servers in segments with at least two copies to ensure data security and integrity. Users can access and manage their files through PC software, Web page and mobile platforms. Platform Products 360 Browsers: The company’s 360 browsers, such as 360 Safe Browser and 360 Speed Browser, are based on dual-core technologies and provide its users with a secure browsing experience. In December 2015, 360 browsers had monthly active PC users of 411 million. The company also offers 360 Mobile Browser for the iOS and Android operating systems. The company’s 360 browsers could automatically block malicious Websites, identify them among search results and scan files downloaded through the browser for security threats. The company’s 360 browsers also offer a ‘private browsing’ option to allow users to surf the Internet anonymously without leaving historical access records. The company also offers 360 mobile browsers for the iOS and Android operating systems. 360 Personal Start-up Page: 360 Personal Start-up Page serves as user’s start-up page aggregating Web services and applications. As the default home page of its 360 browsers, 360 Personal Start-up Page allows users to access and utilize popular Web applications from a convenient site. 360 Search: In 2012, the company launched 360 Search, a search engine using the company’s proprietary search technology. It is the default search engine of its 360 browsers and is also accessible at www.so.com, haosou.com and 360.com. 360 Mobile Assistant: 360 Mobile Assistant is an Android app store, which allows users to browse, search and obtain various mobile applications for mobile devices, and through these applications access mobile Internet on a secure and user-friendly platform. It also allows users to conveniently obtain mobile contents, such as video, music, games and e-books. The company has established relationships with app developers and content providers to provide a large quantity of mobile apps and other content on 360 Mobile Assistant. Smart Hardware and Internet of Things Devices The company offers smart hardware and Internet of things devices, including 360 Auto Guard, 360 Child Guard and 360 mobile phones. Online Advertising The company offers marketing opportunities to its customers by providing comprehensive online advertising service solutions, such as sponsored links, on both of its PC and mobile platform products, such as 360 Personal Start-up Page, 360 Search and 360 Mobile Assistant. It charges fees to its customers based on the effectiveness of its comprehensive advertising services, which is typically measured by active users, clicks, transactions and other actions originated from its platform products. Internet Value-added Services The company’s Internet value-added services include offering games developed by third parties and other Internet value-added services to users. It operates third-party developed games on its game platforms. The company provides game players with a safe and convenient gaming environment. Its game portfolio includes Web games and mobile games. Users could access and play these games directly on the company’s game platforms. The company also provides online lottery purchase services and serves as an agent for providing online distribution services, payment collection services and other Internet value-added services, such as payment collection for mobile charges, and distribution and payment collection of e-books, on behalf of third parties. It charges commission as a percentage of the gross proceeds or collection amount. The company provides payment collection services mainly through third-party professional payment and settlement institutions. In March 2015, the company temporarily suspended its online lottery purchase services, pending the resolution of a joint administrative order from PRC authorities to online distribution of lottery tickets. Others The company offers other technical services on an ad-hoc project basis to enterprise customers, such as IT outsourcing, systems integration services and cloud computing and Internet infrastructure services. Customers The company’s customers primarily include companies using its online advertising services, most of whom put actionable placements on its platform products, such as its 360 Personal Start-up Page, 360 Search and 360 Mobile Assistant. The company’s typical online advertising customers are online and offline businesses that need Internet users and traffic to support their operations. In 2015, it had approximately 600 enterprise customers. Suppliers The company’s suppliers of servers, network equipment and office computers are all from China and primarily include Huawei, Lenovo, Dell and other system integration suppliers. Under its framework agreements with those suppliers, it purchases servers, network equipment and office computers based on its requirements for each purchase order. Its primary Internet data center, suppliers include China Telecom, China Unicom and China Mobile. Intellectual Property As of December 31, 2015, the company had 664 registered trademarks in China and 160 registered trademarks outside of China, and held 517 registered copyrights to software programs covering almost all of its products. As of December 31, 2015, the company had 6,600 pending patent applications and received 918 authorized patents from various governmental authorities. The company has registered the domain name ‘360.cn’ with China Internet Network Information Center and ‘360.com’ with the Internet Corporation for Assigned Names and Numbers. In addition, the company has registered 553 domain names with various domain name registration services as of December 31, 2015. The company licenses malware scanning engines and signature libraries and other security technologies from third parties, such as BitDefender SRL. Significant Events In August 2017, JD.com had signed a strategic cooperation agreement with the company. Competition The company competes in the Internet security market with other companies providing anti-virus software, such as Cheetah Mobile Inc. and Beijing Rising Information Technology Co., Ltd. The company competes with PRC-based Internet companies that build Internet platforms to offer similar value-added and online advertising services as it do. Its primary competitor in this market is Tencent Holdings Limited. Additionally, its primary competitors in the search market are Baidu Inc. and Sogou Inc. History 360 Security Technology Inc. was founded in 2005.