China: 360 v. QQ: Abuse of Dominance Action Tried at Guangdong Higher Court

Last Updated: 10 May 2012
Article by Susan Ning and Hazel Yin

On April 18, the Guangdong Higher People's Court held the first court hearing for the abuse of dominance action filed by Qihoo(the operator of 360 safety software)against Tencent(the operator of QQ instant messaging software)under the Anti-Monopoly Law ("AML"). Qihoo accused Tencent for abusing its dominance in the market of online instant communications services and claimed damages of RMB 150,000,000. The court hearing lasted for more than 8 hours, and attracted an audience of almost 400 people.

As requested by the court, the hearing was divided into four sessions, dedicated to each of the four issues: market definition, dominant position, abusive conducts and legal liabilities. The hearing focused on the first three issues and both sides called in expert witnesses and had fierce debates over each of these issues.

Market Definition

Market definition is the threshold issue of an abuse of dominance claim. Qihoo argued that the relevant market is the mainland China market for online instant communication services, encompassing integrated text, voice and video services.

Following the State Council's Guideline on Relevant Market Definition, Qihoo mainly employed the demand-side substitutability test and reached into the conclusion that the integrated text, voice and video services constitute the smallest antitrust market from the consumers' perspective. Qihoo found that emails, social networks, microblogs, as well as traditional communication methods, such as telephone/mobile phone are not close substitutes of online instant communication services. Moreover, this market is of particular relevance for purposes of this dispute because Tencent's abusive conducts that are challenged in this dispute are related to this market.

The geographic market is defined as the mainland China market, in particular because of the preference of Chinese consumers, legal barriers in China on overseas service providers, and the distinct competitive dynamics in China.

Dominant Position

Article 19 of the AML sets forth a presumption that if an operator has more than 50% of the share in a relevant market, the operator shall be presumed to have dominance in the relevant market. This presumption is rebuttable; yet the burden is shifted to the defendant to prove that it is not dominant.
Various sources of independent third-party data employing different measures, including active usage, penetration rate, and use frequency all lead to the same conclusion that Tencent has more than 50% of the shares of the relevant market.1

Moreover, network effects/locked-in effects of its instant communication services also significantly contributed to Tencent's dominance. Refusal to interoperate with other service providers reinforced Tencent's dominance and together with network effects/locked-in effects caused significant barriers to entry and expansion.2

Abusive Conduct

Article 17 of the AML provides that a company having a dominant market position is prohibited from engaging in various abusive conducts to eliminate or restrict competition.

In this case, Qihoo claimed that Tencent abused its dominance in the instant communications market by (1) forcing consumers to choose between QQ and Qihoo products in November 2010, constituting a violation of Article 17 (4) of the AML against exclusive dealing; and (ii) bundling QQ safety software with QQ IM software without valid reasons, constituting a violation of Article 17 (5) of the AML against bundling.

In the end, the court closed the hearing without rendering a judgment.


Ever since the AML was enacted, AML private litigations, in particular abuse of dominance actions have been very active. Yet up till now, there has been no case where the court ruled in favor of the plaintiff. In most of the cases, the plaintiff's claims were rejected by the court for failure of meeting the burden of proving the defendant's dominance.

This is the first AML litigation where the plaintiff engaged in in-depth analysis and presented ample evidence to prove the defendant's dominant position. 3The burden of proof shall then shift to the defendant to prove that it does not have a dominant position.

The 360/QQ dispute will not be an easy case in any jurisdiction, and posed particular challenges for both Chinese legal practitioners and the courts, in particular considering the AML itself is only less than four years old. Nevertheless, we expect to see this case bringing about development of the AML judicial practice as it proceeds.

*Qihoo is represented by attorneys from the antitrust and IP litigation group of King & Wood Mallesons.


1Unlike the Microsoft/Skype merger case in the European Commission ("Microsoft/Skype"), where market share is considered to be of limited value in evaluating the market position of the service providers, the competitive dynamics in the Chinese market is vastly different (e.g. QQ's market share has consistently been very high, with no comparable competitors, and no successful entry/expansion in the relevant market for the past five years) and can only suggest a conclusion to the contrary.
2Unlike Microsoft/Skype, where network effects are considered to be mitigated by a relatively small "inner-circle", QQ users' contact circle is significantly larger and the network effects are reinforced by QQ's refusal to interoperate with other service providers.
3Qihoo engaged RBB Economist to present an economic report and also invited RBB economists to testify at the court hearing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions