Conflict stems from alleged abuse of monopoly by messaging company

A high-profile dispute over online monopoly between China's Internet giants hit the off-line world during a court hearing in Guangzhou, Guangdong province, on Wednesday.

Tencent Holdings, China's largest instant messaging service provider, was accused in the Guangdong High People's Court on Wednesday of abusing its dominant market position in a case filed by Qihoo 360, an anti-virus software company.

A decision against Tencent could cost the company as much as 150 million yuan ($23.8 million) in compensation, and make the Internet giant publicly apologize for having misused its dominant market position.

The hearing, which attracted about 300 listeners, including experts, industry insiders and local lawmakers, lasted for more than eight hours before the panel of three judges announced an adjournment, without providing a date for continuation.

Qihoo 360 has accused Tencent of violating the country's anti-monopoly laws by, among other actions, introducing bundled sales to prevent its users from installing Qihoo's software, said Ning Xuanfeng, one of Qihoo 360's lawyers.

Those moves damaged the principle of fair competition, Ning said.

Tencent denied the accusation and argued that many other applications with instant messaging service, including Windows Live Messenger and Sina Weibo, also have major market shares.

"In addition, bundling sales is designed to protect Tencent's intellectual property rights," said Xu Yan, one of Tencent's lawyers.

QQ, an instant messaging software from Tencent, has about 76.2 percent of the market share, according to consulting company iResearch.

Zhang Xuejun, the court's presiding judge, said there are issues to be clarified before a ruling could be handed down, including how to define the "market", whether the defendant has a dominant market position and whether it has taken advantage of its market share.

Li Qing, deputy director of the anti-monopoly bureau of the National Development and Reform Commission, said at an anti-monopoly seminar on Sunday that behind the complicated disputes are often contests for profit, and the Internet industry should also work under the basic guide of the Anti-Monopoly Law.

"Innovation is one of the biggest benefits of the Internet industry, which should be protected, although companies may make mistakes while trying out new things," said Li Guobin, a senor official from the Ministry of Industry and Information Technology.

Wang Bin, an official from Beijing's online copyright protection association, said cutthroat competition has become more common in the Internet industry, and the spat between Qihoo 360 and Tencent is just one example.

"No matter what the ruling is, it will have a far-reaching impact on Internet development, especially for instant messaging services," Wang said.

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