Groupon Is Going To Partner With China's Facebook

Groupon is in advanced talks to partner with Tencent, the biggest social network in China and the third most valuable internet company in the world, Kara Swisher reports at AllThingsD.

Groupon has been extremely aggressive in its international expansion efforts. After all, the daily deal market is a landgrab, and Groupon needs to open as wide a lead with its competitors as possible, and international is an obvious area. 

But China has been problematic for US companies which often fail there, and China is known for knockoffs of everything. (There is even a Groupon.cn which is a straight copy of the site and not affiliated with Groupon at all.)

So partnering with Tencent makes a lot of sense. Tencent is the dominant social network in China, thanks to its instant messaging platform QQ, which it monetizes with virtual goods like avatars. Tencent is also trying to make inroads in commerce, with a marketplace called Peipei which goes after e-commerce leader Taobao.

We'll see how it goes.

Now Read: 10 Asian Tech Companies That Are Putting American Ones To Shame

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Groupon Is Going To Partner With China's Facebook

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China's Politburo Behind Google Cyber-Attack?

theodp writes "While Wikileaks itself is under a DoS attack, details about the US State Department cables obtained by WikiLeaks are starting to come out via the mainstream media. Among the most newsworthy, reports Techcrunch's Erick Schonfeld, is one set which deals with the massive computer attack on Google and other companies which was first revealed last January. According to the NY Times, some of the new leaked cables point directly at China's Politburo for instigating the original attacks, which should shed some more light on why the White House and State Department backed Google so vociferously at the time. Developing, as Drudge likes to say."

China's Politburo Behind Google Cyber-Attack?

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China's Online War and Why it Will Create a Safer Internet for the Middle Kingdom

There is a war currently being fought in China's cyberspace. No, it does not involve the Great Firewall of China, nor does it involve Google's next attempt at market expansion in the Middle Kingdom. On the contrary, this war is being fought between two domestic Internet players: Tencent and Qihoo 360.

Over the past few months the two companies have been in a fierce battle to win users and their corresponding data. Qihoo 360's actions have forced Tencent to go to extreme measures and issue an ultimatum to Chinese netizens to choose either their software or that of Qihoo 360.

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Guest author Joel Backaler writes The China Observer, an award-winning blog focused on Chinese technology trends and consumer culture. His writing has appeared in and he has been quoted by the Wall Street Journal China Journal, BusinessWeek, and Seeking Alpha. Joel is a Mandarin-speaking former Fulbright Fellow who has worked and lived in Taipei, Beijing and Singapore with Frontier Strategy Group. Follow Joel on Twitter.


Before we examine why this battle is being fought, let's take a quick look at who the two players are:

Qihoo 360 retaliated by releasing a new "Privacy Protector" that informed netizens which data Tencent was supposedly stealing from their computer...

Tencent is best known for it's QQ instant messenger service, and is one of the biggest internet companies in China. In the first half of 2010 alone, the company earned ¥3.7 billion, experiencing 66% growth year-on-year. In addition to IM, Tencent's reach extends into the realms of online media, mobile and telecom, interactive entertainment and value-added services.



Qihoo 360 is, unlike the Internet conglomerate of Tencent, focusing on its core product 360 Safeguard, an anti-virus software program. While Tencent's QQ has nearly 1 billion active users, Qihoo 360 has approximately 300 million users.



Why would two companies with non-competing products engage in such a vicious battle?



The truth is Tencent did release a competing product to Qihoo 360. The key to Tencent's success is in its massive user base acquired through the widespread usage of QQ instant messenger. The moment a business model is proven successful in China's Internet space, Tencent has the capital and capabilities to make a better copy of the original product, and release its own version to nearly one billion Chinese netizens seemingly overnight. After observing Qihoo 360's success, Tencent leveraged this strategy by automatically updating all of QQ users' software with a new tool called QQ Safety Manager, a competing anti-virus tool, this past September.



Needless to say Qihoo 360 was not about to just sit back and watch Tencent's anti-virus software put them out of business. Qihoo 360 retaliated by releasing a new "Privacy Protector" that informed netizens which data Tencent was supposedly stealing from their computer as they used the QQ IM service.



By mid-October, Tencent took formal legal action, but in the meantime Qihoo 360 launched its second attack on Tencent by prompting users to download a new tool called "KouKou Bodyguard."



Upon installing the program, KouKou Bodyguard ran an initial virus scan that classified all of QQ's functionalities as serious threats to the computer system. When users eliminated the "virus threat" KouKou Bodyguard actually deleted all of QQ's functions - except for one. The one exception was when the user clicked on "QQ Safety Manager" instead of QQ's safety check opening, KouKou Bodyguard appeared in its place.

Tencent's Ultimatum

In response, Tencent said they had no choice but to make Chinese netizens decide between their service or Qihoo 360. If Tencent did not act, KouKou Bodyguard would spread rapidly through their user base dismantling the QQ empire. Therefore any computer with Qihoo 360's software would not be allowed to access QQ going forward. In an open letter to QQ users, Tencent proclaimed that rather than fight a battle on the desktops of its users (like Qihoo 360 did), Tencent would simply give the choice of which software to use to the users themselves.


At this point, Qihoo 360 has discontinued the KouKou Bodyguard tool, and it seems as though through the mediation of China's Ministry of Industry and Information Technology, the battle between the two Internet firms is subsiding.

What Does This Mean for China's Internet Industry?

While the dispute between Tencent and Qihoo 360 was not ideal for Chinese Internet users as the event unfolded, they will be better off for it. Just as China's melamine crisis in 2008 forced Chinese consumers to change their buying behaviors, the Tencent-Qihoo 360 saga will potentially have a similar impact on China's Internet industry.

It takes extreme situations to invoke a sense of seriousness around a particular issue. Chinese netizens will likely become more vigilant about what they are downloading, where the software comes from, and what data they may be potentially sharing. This type of change will not happen over night; however, this may very well mark the beginning of a safer Chinese Internet.


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