China’s Tencent urged to tread carefully following consumer backlash

An excellent Wall Street Journal blog from Andrew People looks at recent incidents Chinese investment firm Tencent is creating in China and why it, and other increasingly-popular internet firms in the country must treat carefully.

From the post:

Wielding the heft of China’s state-owned companies, but lacking the government’s backing, China’s Internet companies need to tread ever more carefully. Instant-messaging giant Tencent offers the latest illustration.

China’s Internet sector has been a rare area of opportunity for privately owned, entrepreneurial companies like Tencent—the world’s third-largest Internet company by market capitalization—and counterparts Baidu and Alibaba.com. But rapid growth in these companies also means they find themselves more dominant within their fields than many government-backed enterprises. That’s exposing them to new legal and public-relations challenges concerning their often monopolistic positions.

While Tencent is often championed as an example of the ‘freedom’ for innovative, tech/internet businesses in China, it is not the darling of the country’s government. However, as the blog outlines, it has incurred the wrath of a very different audience, its own users of allegations of data privacy mismanagement.

Tencent currently engaged in a very public scrap with antivirus software firm Qihoo 360. Qihoo recently alleged Tencent was scanning the private data of its users. In retaliation, Tencent has stopped providing instant-messaging services to users who have installed Qihoo 360’s software.

The company holds a 76% share of China’s instant messaging through its QQ product, and has developed many of China’s leading online games. So whatever the rights and wrongs of the case, it’s difficult for Tencent to escape accusations of bullying.

That means the company, which built its reputation on knowing how to provide the right services for a mass customer base, is inspiring resentment.

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