Key online players in Rmb150 million dispute over abuse of dominance - International Law Office

On April 18 2012 the Guangdong Superior People's Court heard a claim brought by Qihoo 360 Technology Co Ltd against Tencent, accusing the latter of abusing its dominant market position. Given the identity of the parties and the claim amount of Rmb150 million, it is unsurprising that the case has attracted considerable attention.

Qihoo 360 operates internet services and sells third-party anti-virus software in China, where it provides internet and mobile security products. In January 2011 Qihoo's internet security products had 328 million users a month in China - a user penetration rate of 83.9%.

Tencent comprises Shenzhen Tencent Computer Co Ltd and Tencent Technology (Shenzhen) Co Ltd. It provides a wide range of services in relation to social networking, web portals, e-commerce and multiplayer online games. It operates instant messenging service Tencent QQ and one of the largest web portals in China, QQ.com. As of December 31 2010 there were 647.6 million active Tencent QQ user accounts, making Tencent QQ the world's largest online community. The number of simultaneous online users has previously exceeded 100 million.

Qihoo 360 alleges that Tencent used its dominant position in the instant messaging software and services market in China to force users to uninstall Qihoo 360's software, thereby violating Article 17 of the Anti-monopoly Law. However, the two sides disagree on the extent and definition of the relevant market, the relevant market share data and, accordingly, whether the defendant has a dominant position.

Both sides called expert witnesses. Qihoo 360 engaged David Stallbass, formerly of the UK Office of Fair Trading, while Tencent engaged Jiang Qiping, the secretary general of the Information Research Centre at the China's Academy of Social Science. The weight that the court chooses to attach to their evidence, given a shortage of related jurisprudence and relevant data, may prove to be one of the most significant aspects of the case.

After seven hours of what a source described as a "persistent verbal battle", the case was adjourned. Many antitrust experts foresee a protracted dispute between the parties.

For further information on this topic please contact Zhan Hao at Grandall Legal Group by telephone (+86 10 65 890 699), fax (+86 10 6517 6800) or email (zhanhao@grandall.com.cn).