Tencent has, however, vehemently denied the claims by ByteDance and said they are only meant to cause defamation.
Over the weekend, the Beijing Intellectual Property Court accepted a lawsuit filed by ByteDance Ltd against Tencent Holdings Ltd (HKG: 0700) over monopolistic practices.
According to the lawsuit, ByteDance alleges that Tencent has been denying Douyin – a Chinese version of TikTok- access to WeChat and QQ content sharing capabilities. The two tech rivals have seen their business operations scale during the pandemic, thus attracting huge attention from regulators on the market competitiveness.
“Tencent’s behavior no doubt constitutes monopolistic behavior achieved by abusing market domination to exclude and limit competition, which the proposed anti-monopoly law prohibits,” Douyin said.
China passed new antitrust laws late last year that have arguably sparked different cases, particularly in the technology-dominated market. Notably, ByteDance claims that Tencent is misusing its market dominance thus provoking unhealthy competition. The company noted:
“We believe that competition is better for consumers and promotes innovation. We have filed this lawsuit to protect our rights and those of our users.”
Tencent has, however, vehemently denied the claims by ByteDance and said they are only meant to cause defamation. Moreover, the firm has indicated that it will counter-sue ByteDance for damaging its platform ecosystem and also breaching its users’ rights.
Closer Look at ByteDance and Tencent Lawsuit
Speaking in an interview last week, Zhai Wei, executive director of the Competition Law Research Center of East China University of Political Science and Law, noted that it will be a historical landmark in the Chinese antitrust cases.
However, being the first of such cases with the new antitrust laws, it is not yet clear how long the case could take before being finalized. Perhaps years if not months depending on the complexity of the case.
Notably, ByteDance has an ongoing lawsuit case against Tencent that was filed back in 2019 and has negligibly progressed. In a bid to counter each other’s competitiveness, both tech giants have attempted to create platforms similar to the rivals but with no positive results. Notably, ByteDance previously introduced a chat app while Tencent developed video sharing apps but none of them managed to shake the other’s dominance.
As the Chinese market evolves through the coronavirus pandemic, technology-based companies have found themselves on the regulators like radar. The Chinese government is keen on providing healthy grounds for a competitive market to allow smaller capped companies to operate without harassment from established companies.
Previously, the Chinese regulators launched an antitrust probe into Alibaba Group Holdings Ltd (NYSE: BABA) over monopolistic practices.
The lawsuit by ByteDance against Tencent apparently did not make a significant impact in the latter’s stock market. According to market data provided by MarketWatch, Tencent stock closed Hong Kong Monday’s trading session at HK$ 736.50, up 0.48%. Besides, they rallied approximately 83% last year and they are now up over 30% year-to-date.