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Kingsoft Corporation announced two months ago that it would spin off a business unit for Internet security and other services and list its shares in the U.S. Now, the spinoff, Cheetah Mobile, has filed with the U.S. Securities and Exchange Commission for a splashy U.S. IPO

Formerly known as “Kingsoft Network” in China, the company developed a web browser called Cheetah. Cheetah Mobile plans to raise $500 million on the New York Stock Exchange.

In the past few years, Cheetah has successfully adopted the business model of Qihoo, a security service that piloted the free-with-ads model in China.

Actually, a handful of Chinese Internet companies that offer free Internet services, including the biggest Chinese input method service provider Sogou, adopted Qihoo’s model. They’d channel users of their free software to a web browser and monetize mainly through search marketing and other advertising means, and online gaming.

81.7 percent of the total revenues by Cheetah Mobile in 2013 was from advertising, and the rest was from gaming, according to the company’s prospectus.

Kingsoft acquired Conew, aka Keniu, an Internet security and photo editing service provider in 2010 and merged it into its own anti-virus business. The acquisition of Conew was seen as a strategy of Kingsoft to fight against Qihoo, which disrupted the China’s Internet security market by making its paid security service free.

Like Qihoo, the combination of Conew and Kingsoft’s anti-virus business would offer their services for free, develop a web browser Cheetah and expand overseas.

As Qihoo had been dominating in online security and web browser markets in China, Kingsoft thought there might be a chance to beat it overseas.

While Qihoo launched an English version of its flagship security service and bought a stake in a Brazilian security product, Kingsoft stealthily launched Clean Master, an Android storage management app in 2012. At the end of 2013, Sheng Fu announced the free app had had more than 100 million installs.

Moreover, we learned from mobile advertising and other service providers that the company has spent a large amount of money acquiring overseas users since its launch. Now, Clean Master is trying to gain users in the domestic market.

This story originally appeared on TechNode. Copyright 2014


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