The dispute between software companies Qihoo 360 and Tencent late last year revealed complex relationships among Chinese regulators, netizens, media outlets, and the companies themselves.
The dispute, which escalated through September and October before it was quashed by the Ministry of Industry and Information Technology (MIIT), had its roots in the competition to provide China’s over 450 million internet users with antivirus software. Tencent, which operates the wildly popular Chinese instant messaging service QQ, alarmed Qihoo 360 by auto-installing its QQ Doctor software along with the instant messenger. Qihoo 360, the leading provider of antivirus software in China, struck back by accusing QQ of spying on its users and labeling QQ malware. In an effort to force users to take sides, Tencent then halted QQ services on any computer with Qihoo’s antivirus software installed, gambling that users would choose to keep using their familiar instant messaging software as opposed to a much less well-known antiviral product.
Unfortunately for Tencent, their move to hold QQ hostage was widely panned and derided by netizens as rumors swirled that Qihoo 360 was correct about QQ’s proclivity to track users’ behavior. As the embarrassing war of words dragged on, providing endless fuel for netizen satirists and creating space for international companies to target newly dissatisfied Chinese consumers, the Chinese government began to get involved. Articles in China Daily and other state-run media harshly criticized both companies and called for a resolution to the conflict. Next, MIIT began its own investigation into Tencent and Qihoo’s business practices and compliance with national laws and regulations. It determined that the two companies were both at fault for engaging in non-competitive practices and ordered the companies to cease their conflict, restore mutual compatibility, and apologize to the public.
MIIT’s involvement ended the dispute and seems to have largely restored the status quo, but the conflict spurred the development of a new regulation. On January 14, MIIT released for public comment the Provisional Measures on the Supervision and Management of Order in the Internet Information Services Market. The draft Measures would bar providers of online services from interfering with other providers’ provision of legitimate and legal products or services and from discrediting competitors. The draft also emphasizes the importance of protecting users’ information, prohibits software that maliciously blocks or intercepts information from internet services, and directs companies to desist from bundling software products.