The rivalry between the world’s leading technology companies intensified today when Microsoft announced that it is suing Google for poaching one of its leading executives.

Microsoft is furious about the defection of Dr Kai-Fu Lee, one of its technology experts and founder of its Asian research division, who has left to head Google’s first research and development centre in China.

Microsoft claims the move violates confidentiality and non-competition agreements Dr Lee signed when he joined the company in 1998. The software company is seeking a court ruling that would require Dr Lee to honour his contract, which it says includes a clause forbidding him to work for a rival within a year of leaving.

"As a senior executive, Dr Lee has direct knowledge of Microsoft’s trade secrets concerning search technologies and China business strategies," Microsoft said.

Microsoft claims Dr Lee’s position at its search rival focuses on "the same set of technologies and strategies for a direct competitor in egregious violation of his explicit contractual obligations.

"Creating intellectual property is the essence of what we do at Microsoft, and we have a responsibility to our employees and our shareholders to protect our intellectual property," the company added.

But Google said it would defend itself "vigorously" against Microsoft’s action and vowed to "fully support" Dr Lee in the matter.

"We have reviewed Microsoft’s claims and they are completely without merit," Google said.

The legal action comes as Microsoft and Google compete on an increasing number of fronts. Microsoft is looking to wrest control from Google of the lucrative paid search market while Google is fighting back by trying to poach users from Microsoft’s hotmail service with its own 1GB webmail account.

Both companies have also released desktop search products and have similar mapping and directory services. The dispute over Dr Lee also forms part of a wider battle for market share in the rapidly expanding Chinese search business.

Last year the market was worth an estimated $150 million, up 81 per cent on 2003. By the end of this year China is forecast to overtake the United States to have the largest number of internet users in the world.

In May of this year, Google was granted a licence to open its first office in China, marking a turnaround in attitudes to the search engine by the Chinese authorities. In 2002, the Chinese government blocked Google because it pointed to pro-democracy websites. Google has always denied that it negotiated with the Chinese government to unblock its site.

A recent survey by Shanghai iResearch found that Google has a 21 per cent share of the Chinese search market, making it the country's third most popular web search engine after Baidu.com and Yahoo.

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