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Cyber fans need to be aware free lunch may not always be so
2010-11-05 08:36

A recent cat-fight between Tencent Inc and Qihoo 360 has proven the wisdom of that old saying: There's no such thing as a free lunch. The cyber world keeps trying to knock that wisdom back without success.?

Users of Internet applications including QQ and 360 Guard pay a price for the right to choose software, personal information and privacy.

Shenzhen-based Tencent, China's biggest dot.com firm by market value, announced on Wednesday that its QQ, a chatting tool, will no longer operate on computers installed with software from Qihoo 360.

The latter claimed that Tencent was scanning users' documents through QQ and launched a tool to block QQ plug-ins last week.

In response, 360 stopped providing downloads for another tool called 360 Koukou Guard ? a name that sounds like QQ in Chinese - but it still advised users to stop using QQ for three days and tried to switch to other chatting tools like MSN and Fetion.

The result of this battle in the cyber world was to force hundreds of millions of web users to decide whether they want to keep using the country's most popular chatting tool or whether they prefer China's top Internet security tool. They can't have it both ways any more.

QQ's 1 billion registered users and 360's 300 million users lost the right to install both tools on their computers.?

"It's the biggest and most serious battle in the Chinese Internet industry," said Qu Xiaodong, an Internet analyst and former president of information technology consultants CCW Research. "The battle just started on millions of computers without users knowing what was going on."At present, users caught in the middle can do little more than complain online. Neither consumer rights groups nor the courts are expected to intervene in the dispute because both QQ and 360 Guard operate free-of-charge to users.

Both firms said they sent software codes and other materials to regulators to demonstrate their "fair play" in the dispute, but it often takes several months or even longer to see any result because of the complicated technology and even more intricate Chinese Internet regulation system.

In China, Internet issues are regulated by the Ministry of Industry and Information Technology, the Ministry of Culture, the General Administration of Press and Publication and sometimes the Public Security Ministry.

Both firms have apologized for disruptions to users and explained they had taken action to "improve users' experience and computer security," according to about 10 e-mail statements delivered to Shanghai Daily since 6pm on Wednesday.

Aside from the public relations efforts, it was inevitable that the two giants would come to blows sooner or later because they have the same business models and target the same users. I can sum it up in three concepts: free tools, paid extra services and huge user bases.

More than 1.06 million netizens, or 79 percent of respondents to an online poll conducted by Sina, agreed with the argument that the two companies "care more about their business interests than about their users."

Initially, both firms looked too good to be true with their images enhanced by their free services and tools. When they gained solid base of users and huge market shares through their free business models, they expanded their scope to so-called "value-added" services, charging clients and earning considerable revenue.

Tencent has expanded into games, Internet browsers and advertising based on its QQ clients.

In the past three years, Tencent's revenue soared 326 percent, ranking the company 41st among China's 50 fastest-growing high-tech firms, according to a Deloitte report.

The development of 360 has been equally stunning.

It launched a free Internet security system to grab market share from paid software makers like Kingsoft and Rising. Then it launched an Internet browser and paid services, such as online storage, and other customized offerings.?

Cyber fans need to be aware free lunch may not always be so

"We will make 3 billion yuan (US$447 million) of revenue annually if everyone pays 10 yuan a year, or less than 1 yuan each month," 360 President Qi Xiangdong predicted during an earlier interview.

It's always a matter of hot discussion in the dot.com industry on how companies can turn their huge bases of free users into an income-stream model. In China, that's called going "from eyeball to real money."

In fact, the "battle of client ends" is widespread in the Internet industry.

Firms like Alibaba, Baidu and Sina are also packaging various services, including search functions, games, blogs, and typing input tools, that users can download.

The huge databases of users, including personal information, cyber habits and online shopping record, are valuable to advertisers.?

As of the end of June, China had more than 400 million Internet users to rank No. 1 globally.

Regulators and third-party organizations don't tell millions of Chinese users to what extent companies use database information they provide, sometimes unknowingly.

That's the price of the free tools: Your online behavior will be recorded under the slogan of a "better user experience," and you, in turn, have to tolerate uninvited pop-up ads from marketing firms.

From the two companies' statements this week, it's easy to understand how they have scanned user information for some time. They can easily access other software processes, which are permitted by users, through remote control.

Meanwhile, I am not surprised at all about the latest news from paid anti-virus software providers.

Since yesterday, Kingsoft and Kaspersky announced they would provide free security services for one year.

They know how to use the "free" weapon in competition, and so much for "free lunches."

Source:Shanghai Daily