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Winning Mobile IM in China

What happens when monopolies collide?

Tencent’s QQ instant messaging software has long dominated in China. However, China Mobile has used its near monopoly of cell phone users in China to give its own mobile IM software advantages and force Tencent to pay it even higher fees for using its network.

 

Who will win the battle for mobile IM as the stakes rise in the smartphone era?

 

661 million customers made China Mobile the largest telecommunications company in the world. It was the sole operator of China’s exclusive 3G and 4G technologies. It was practically a monopoly in China. Despite making inroads with its own IM software Fetion, QQ remained dominant in PC and mobile IM. Frustrated, China Mobile resorted to extorting ever larger fees from captive QQ’s mobile sales and attempting to force it off its network. It resented QQ’s IM programs cannibalizing its important text message revenue, so it made Tencent pay. With the stakes even higher in the smartphone era, could China Mobile finally challenge Tencent for mobile IM leadership?

 

With over 721 million active PC IM users at year-end 2011, Tencent’s (SEHK 700) QQ instant messaging (“IM”) software dominated the market. Yet, the revenue growth of this cash cow had started to decline. Could its leading mobile IM platform be its savior?

Case advisor: 
Brian Viard
Case writer: 
Richard Bethune
Keywords: 
monopoly, smartphone, instant messaging, network