360 v. Tencent
   HOME

TheInfoList



OR:

''360 vs Tencent'' is a dispute between two
Chinese Chinese can refer to: * Something related to China * Chinese people, people of Chinese nationality, citizenship, and/or ethnicity **''Zhonghua minzu'', the supra-ethnic concept of the Chinese nation ** List of ethnic groups in China, people of ...
IT companies,
Tencent Tencent Holdings Ltd. () is a Chinese multinational technology and entertainment conglomerate and holding company headquartered in Shenzhen. It is one of the highest grossing multimedia companies in the world based on revenue. It is also the wo ...
and
Qihoo Qihoo 360 (; approximate pronunciation CHEE-hoo), full name 360 Security Technology Inc., is a Chinese internet security company that has developed the antivirus software programs 360 Safeguard and 360 Mobile Safe, the Web browser 360 Secure Brows ...
, over competition practices that has escalated in November 2010, and hundreds of millions of users were forced to choose sides in the dispute. It is the first anti-monopoly case to be heard by the Supreme People's Court since the Anti Monopoly Law of China was promulgated. At the time Qihoo, the producer of the anti-virus software
360 Safeguard 360 Safeguard () and 360 Total Security is a program developed by Qihoo 360, an internet security company based in China. 360 Safeguard's focus is on stopping malware such as computer viruses and trojan horses and providing security patches fo ...
, was a competitor of QQ Doctor, which gained 40% of the Chinese market overnight when it bundled with
Tencent QQ Tencent QQ (), also known as QQ, is an instant messaging software service and web portal developed by the Chinese technology company Tencent. QQ offers services that provide online social games, music, shopping, microblogging, movies, and grou ...
. On September 27, 2017, Qihoo released privacy guard software that showed QQ's suspicious spying activities on its users. Tencent then responded with a fabricated report alleging that Qihoo was under investigation for ads involving pornographic websites, as that Qihoo was attempting to gain support from its competitors in the anti-virus front like
Baidu Baidu, Inc. ( ; , meaning "hundred times") is a Chinese multinational technology company specializing in Internet-related services and products and artificial intelligence (AI), headquartered in Beijing's Haidian District. It is one of the l ...
,
Kingsoft Kingsoft Corporation () is a Chinese software company based in Beijing. Kingsoft operates four subsidiaries: Seasun for video game development, Cheetah Mobile for mobile internet apps, Kingsoft Cloud for cloud storage platforms, and WPS for of ...
, and
Kaspersky Lab Kaspersky Lab (; Russian: Лаборатория Касперского, tr. ''Laboratoriya Kasperskogo'') is a Russian multinational cybersecurity and anti-virus provider headquartered in Moscow, Russia, and operated by a holding company in th ...
.Later Qihoo alleged that QQ scans the installed programs in user's computer based on a "super black list", and attacked TenCent CEO
Ma Huateng Ma Huateng (, born on October 29, 1971), also known as Pony Ma, is a Chinese billionaire business magnate. He is the founder, chairman and chief executive officer of Tencent, one of the most valuable companies in Asia, one of the largest intern ...
, saying he had been receiving government subsidies for housing. Qihoo also updated its privacy guard software to block ads in QQ, Tencent's responded by filing an
unfair competition Unfair may refer to: * Double Taz and Double LeBron James in multiverses ''fair''; unfairness or injustice Injustice is a quality relating to unfairness or undeserved outcomes. The term may be applied in reference to a particular event or situ ...
lawsuit against Qihoo and released an update that blocked Tencent products from running on machines with 360 Safeguard installed. Hundreds of millions of Chinese computer users were forced to choose sides in the legal conflict by choosing to, either uninstall QQ or 360's privacy guard.


Litigation at the Guangdong High People's Court

A case of “abuse of dominant market position”, the first anti-monopoly law (AML) private enforcement case that was initially brought to and examined by the provincial
high people's court A high people's court or higher people's court (高级人民法院) is the highest local court in the People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List o ...
. The
Guangdong Guangdong (, ), alternatively romanized as Canton or Kwangtung, is a coastal province in South China on the north shore of the South China Sea. The capital of the province is Guangzhou. With a population of 126.01 million (as of 2020) ...
High People's Court issued a judgment that was both controversial and highly criticized by commentators. In their judgment they held that: * The relevant geographic market was worldwide. This meant that companies like
Facebook Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dustin Mosk ...
and
Twitter Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...
, which are banned in China, were considered to be competitors of Tencent. * The relevant market included social media sites, email service providers and others. Tencent was found to not have abused a dominant market position.


Litigation at the Supreme People's Court

Dissatisfied with the decision of the Guangdong High Court, Qihoo decided to appeal to the
Supreme People's Court The Supreme People's Court of the People's Republic of China (SPC; ) is the highest court of the People's Republic of China. It hears appeals of cases from the high people's courts and is the trial court for cases about matters of nation ...
. By far, the Supreme Court's written judgment is the best and most professional, both judicially and technically, judicial judgment of its kind ever amongst all AML cases in China. Given the judicial power and nature of the Supreme Court, this judgment established and reaffirmed several very important judicial rules with precedent case law effect insofar as the private enforcement of AML is concerned. These important judicial rules include: # reaffirms the doctrine of ''semper necessitas probandi incumbit ei qui agit'' (he who alleges must prove) with regard to the allocation of ''onus probandi'' ( burden of proof) in the AML judicial case # defining the relevant market is not a purpose but instead rather a methodology in assessing the relevant undertaking's market power and the influence power of the alleged monopoly conduct on to the competition, as such it is not compulsory to specifically and exactly define the relevant market in every AML litigation of abuse of dominant market position # a hypothetical monopoly test (HMT) based on tools of SSNIP (
small but significant and non-transitory increase in price In competition law, before deciding whether companies have significant market power which would justify government intervention, the test of small but significant and non-transitory increase in price (SSNIP) is used to define the relevant market ...
) or SSNDQ (small but significant and non-transitory decrease in quality) may be conducted in defining the relevant market but should be conducted carefully with caution # the related market situation and technology development trend post the litigation may be taken into consideration in defining the relevant market # market share is not the only element in concluding a dominant market position # multi-elements should be comprehensively evaluated in defining the dominant market position, including but not limited to: ## the market share of the undertaking in question and the competition situation of the said market; ## the control ability of the undertaking in question in the said market; ## the financial and technical status of the undertaking in question; ## the degree of dependence of other undertakings on the undertaking in question; and ## the degree of difficulty to access to the relevant market by other undertakings # if the relevant market is clearly defined and the alleged undertaking does not have dominant market position, normally it is not necessary to conduct an abuse behavior analysis and it can be directly concluded that such undertaking did not have abuse behavior; however, if neither the boundary of the relevant market nor the dominant market position of the alleged undertaking is clear or if the alleged undertaking had dominant market position, “effect examination” may be carried out so as to determine if the alleged conduct was lawful or not # the “tie-in” under the AML is illegal if it meets all of these criteria: ## the base product and the “tie-in” product are independent to each other, ##) the undertaking has a dominant market position in the base product market, ## certain enforcement implemented upon the buyer who became lack of other options but to accept the tie-in product, ## the tie-in could not be justified and was contrary to the commercial or consumer practice or ignored the functionalities of the products, and ## the tie-in gave rise to a negative effect to the competition # if an undertaking successfully proved the alleged monopoly conduct was justifiable under AML does not mean such undertaking has automatically and same successfully proved the monopoly conduct has not caused negative effect of exclusion or restriction of competition.


Designation as a guiding case

''Qihoo v Tencent'' was designated as a guiding case by the Supreme People's Court. While China does not have case law guiding cases can be considered to be persuasive precedents.


Reactions

Yu Fei, CEO of Langezhiyang International Sales Consultant Principal, speculates that the dispute resulted from poor competitive strategy. In a poll conducted by
Sina Sina may refer to: Relating to China * Chin (China), or Sina (), old Chinese form of the Sanskrit name Cina () ** Shina (word), or Sina ( ja, 支那, links=no), archaic Japanese word for China ** Sinae, Latin name for China Places * Sina, Al ...
, 1.06 million users, or 79% of the participants, agree that the two companies "care more about their business interests than about their users." Kingsoft and Kaspersky made their security services free for one year shortly after the dispute escalated. On November 4, 2010, the day after Tencent stopped messaging service on computers with 360 installed, TencentHolding () lost 10.6 billion
HKD The Hong Kong dollar (, sign: HK$; code: HKD) is the official currency of the Hong Kong Special Administrative Region. It is subdivided into 100 cents or 1000 mils. The Hong Kong Monetary Authority is the monetary authority of Hong Kong and ...
, or 3.1% in market capitalization, including 1.1 billion HKD for Tencent CEO Ma Huateng. Kingsoft () jumped 17.86% and gained 784 million HKD in market cap. Another
instant messaging Instant messaging (IM) technology is a type of online chat allowing real-time text transmission over the Internet or another computer network. Messages are typically transmitted between two or more parties, when each user inputs text and trigge ...
software producer Beijing Shenzhou Taiyue Software Corp., Ltd ( Shenzhou Taiyue) () increased by 3.7%. Microsoft's MSN may be seen as the winner of this dispute, as it agreed to integrate their products with Sina "in areas including microblogging, blogging, instant messaging, information content and mobile services." On November 10, 2010, Qihoo 360 said they are going to resume their product's compatibility with QQ.


External links


Dispute between 360 and QQ
Sohu Sohu, Inc. () is a Chinese Internet company headquartered in the Sohu Internet Plaza in Haidian District, Beijing. Sohu and its subsidiaries offer advertising, a search engine (Sogou.com), on-line multiplayer gaming (ChangYou.com) and other se ...

360 vs QQ
NetEase
Dispute between 360 and QQ
Sina Sina may refer to: Relating to China * Chin (China), or Sina (), old Chinese form of the Sanskrit name Cina () ** Shina (word), or Sina ( ja, 支那, links=no), archaic Japanese word for China ** Sinae, Latin name for China Places * Sina, Al ...
*
Chinese law Chinese law is one of the oldest legal traditions in the world. The core of modern Chinese law is based on Germanic-style civil law, socialist law, and traditional Chinese approaches. For most of the history of China, its legal system h ...


References

{{DEFAULTSORT:360 V. Tencent 21st-century controversies Criticisms of companies Tencent