The corporate war between Tencent and Qihoo illustrate the Wild West nature of Chinese business as well as the weakness of the government and competition laws.
Millions of Chinese web users have been caught in the spat between Tencent – the company behind QQ instant messaging – and Qihoo, which makes 360 anti-virus software.
MIIT and the Ministry of Public Security have called on both sides to take a step back, but so far neither has made any concessions.
The dispute reached crisis point last Thursday when Tencent, which has 655 million users, blocked access to its service to all users running 360 anti-virus.
It began two months ago when 360, which claims 70% of China’s anti-virus market, accused QQ of accessing the private data of its users and issued a plug-in to users to block the alleged data scanning. QQ has denied it has stolen any 360 user data.
Qihoo CEO Zhou Hongyi told the Southern Metropolitan Daily newspaper Monday that the government officials had called on the companies to not compel users in any way, but Tencent was still blocking 360 users.
Analysts say both firms will be hit by the fallout, although online polls suggest Tencent is taking more of the blame.
Of 423,000 who took part in a 163.com survey, 66% voted to remove Tencent’s software, while 34% chose Qihoo 360, WSJ reported.
In a sina.com poll, 53.8% voted against QQ and 24.2% against 360.
Duncan Clark, head of Beijing consultancy BDA, told China Daily the government may have to step in to broker a deal.
However, it has few tools at its disposal.