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Qihoo Takes Tencent to Court Tomorrow, Accuses It of Being Monopolistic

Steven Millward

Towards the end of 2010 there was a very public, 10-week long battle between two Chinese web companies, Tencent and Qihoo 360 (NYSE:QIHU - News), that caused alarm at how online data privacy was not being taken seriously. But that whole controversy will flare up again tomorrow as Qihoo takes Tencent (HKG:0700.HK - News) to court in southern China, accusing the social media giant of abusing its market dominance in the way it bundles some apps together. It is seeking as much as 150 million RMB ($24 million) in damages.

This accusation goes to the very core of what caused the initial software and PR battle - see the timeline of the so-called “3Q war” on Wikipedia - back in September of 2010 when Tencent bundled its QQ Doctor anti-virus app into its dominant QQ instant-messaging app. That trod on the toes of Qihoo, which started out as an anti-virus vendor before its recent diversification into social media. Some would say that the resultant altercation was actually about revenge, rather than being about whether the QQ app was reading users’ PC files, as Qihoo alleged at the time. In September last year, almost a full 12 months after this first ignited, a separate verdict from a Beijing court ordered Qihoo to recompense Tencent to the tune of 400,000 RMB ($62,530 at the time) “for slander and unfair competition.”

Now Qihoo wants its day in court, and that will come tomorrow at the Guangdong Provincial High Court, right in Tencent’s home province. Qihoo will be hoping that China’s standing anti-monopoly laws will deem Tencent’s bundling of an anti-virus app with its IM app as such an anti-competitive breach of law. The company is likely to claim that users were being held hostage with the QQ Doctor app, being forced to install it and then disable any other anti-virus apps they might have from other companies, such as Kingsoft, Rising, or Qihoo’s own offerings.

We’ll update tomorrow if there are significant developments on the first day, or wait for the final ruling.