No less than seven record houses have declared war on Yahoo.cn. EMI, Universal, Sony BMG Music Entertainment, Warner Music Group Go East Entertainment, Gold Label Entertainment and Cinepoly Records have sued Alibaba.com Corp. that bought a generous portion of Yahoo China stock last year for $750 million dollars, but also implicitly Yahoo that still owns 40% of the stock. The accusation brought against the company that operates the second most popular search engine in China is that it facilitates through the results returned on the searches access to web sites that host unlicensed music, infringing on copyright laws. According to the record houses, the level of Chinese piracy has reached an unprecedented level. Over 90% of all the music in China is represented by illicit copies, and illicit sales of copyright media earn the black market a profit of no less than 400 million dollars annually.

"We've started the process, and as far as we're concerned we're on a track to litigation", John Kennedy, chairman of the International Federation for the Phonographic Industry, said in an interview by telephone from Beijing. "If negotiation can prevent that, then so be it."

Baidu.cn, the local search engine is confronted with a similar litigation filed in 2005 and yet the negotiations haven't reached a conclusion. With Yahoo, the record houses want to take advantage of a newly passed Chinese law that will fine up to $12.500 those guilty of illicit media distribution.