LeTV.com, a major online video provider, said it had ended its cooperation with a unit of Baidu Inc, the search engine, which it said had infringed the copyrights of its licensed content.
The split was the latest development in a world of fast-changing alliances and flying accusations in the country's cut-throat online video industry.
The two companies were in talks to jointly provide online videos and had come up with a trial service, with LeTV to be responsible for providing content and Baidu for attracting users with its huge search traffic.
"The two companies considered possible cooperation previously on the premise that Baidu deleted pirated content," said Gao Fei, senior vice-president of LeTV.
He said that Baidu Player, software developed by the search engine, enables users to search and watch pirated videos from various websites. LeTV ended the discussions because the search engine didn't act on this, Gao added.
Baidu declined to comment.
"Pirated content would be a big problem for LeTV, which generates revenues by sub-licensing copyrights to other online video websites," said Shi Jialong, a Hong Kong-based analyst with CLSA Asia-Pacific Markets.
As online video providers try to lure users by offering popular movies and TV dramas, they're spending increasingly large sums while they remain in the red. Meanwhile, battles over copyright infringement have increased.
Youku.com Inc and Tudou Holdings Ltd, the two biggest players in China, faced off in a high-profile copyright dispute last year, before they announced a merger this week.
Analysts said that more of the remaining players would merge to fend off competition from the top rival.
Youku and Tudou jointly hold 35.5 percent of the online video market in terms of revenues, followed by portal Sohu.com Inc's 13.3 percent, said domestic research company Analysys International.
"The race is still far from over It will take one or two years for some adjustment to take place," said Pony Ma, chairman and chief executive officer of Tencent Holdings Ltd, China's biggest Internet company by revenues.
He added that there are seven major players in the market after Youku and Tudou's merger, and some are likely to fall behind.
The number of Internet users who watch videos online reached 325 million as of Dec 31, according to the China Internet Network Information Center.
chenlimin@chinadaily.com.cn
