The public battle between Chinese Internet giant Tencent and antivirus software company Qihoo 360, referred to by some as “small gang” (Qihoo 360) vs. “mafia” (Tencent), has led to a spike in new users for other firms, including one of Tencent’s chief rivals, Microsoft.
New user signups in China for Microsoft’s MSN Messenger, a competitor to Tencent’s leading QQ instant-messaging service, have gone “from tens of thousands normally to millions” per day since a flare-up between the two Chinese companies began, a person familiar with the situation said.
The conflict, which appears to have ignited two months ago when antivirus software company Qihoo 360 alleged that Tencent’s QQ was scanning the private data of its users and released software claiming to block plug-ins that could cause such privacy leaks. Tencent denied the allegations, then discontinued its services to QQ users who were also using Qihoo 360’s software. Qihoo 360 responded by encouraging users to discontinue use of QQ.
The spike in MSN users shows that at least some users have taken that request to heart. But while analysts say the incident may push some users to competing services, Zhang Yanan, analyst for Zero2IPO, said the incident is unlikely to turn a significant portion of users against Tencent, which has a loyal following of hundreds of millions of people.
Tencent “really did a poor job in managing this public relations crisis” and the incident might “change QQ users’ view toward the company from trust to emotional resistance,” Zhang said. But, he added, “I can’t see the possibility that a large number of users are going to abandon the service.”
Still, criticisms of the two companies continue to spread, despite reports by state-run media that Tencent and Qihoo have moved to make their services compatible again. Thousands of users have signed online petitions (in Chinese) saying the companies’ actions disregarded the needs of users, or requesting that China’s State Administration for Industry and Commerce launch an anti-monopoly investigation into Tencent’s business practices.
“It’s possible that users might convert to another IM service some day … but from my point of view, it’s not going to happen very soon,” Zhang said. “For the short term, I don’t think this incident is going to change the current market structure.”