Dialogue with Zhou Hongyi: 360's loss is not too big, and the plan to launch IM is just a rash statement

Sina Technology News, early morning of November 6th, Chairman of 360 Zhou Hongyi emphasized in a dialogue with Sina Technology that KouKou Baojia (a security tool) is a legitimate product, and 360 did not deliberately target Tencent. Zhou Hongyi stated that in the confrontation with Tencent, 360 did not suffer too much, losing less than 20% of users. Moreover, some executives mentioned considering launching an IM (Instant Messaging) service which was merely out of frustration.

On the evening of November 3rd, Tencent sent an open letter to its users stating that before 360 stops external plug-in intrusions and malicious defamation on QQ, it has decided to stop running QQ software on computers installed with 360 software. However, at the peak of this conflict, Chairman of 360, Zhou Hongyi unusually chose to retreat.

"Everyone thinks this doesn't fit my personality," said Zhou Hongyi. He mentioned that Tencent's incompatible measures would harm users, which shocked him even though he expected it. "Under various considerations, we prefer to take a loss rather than continue the fight. We withdrew KouKou Baojia and hoped for Tencent to step back."

The current outcome is obviously not what Zhou Hongyi wanted. What troubles him more is that the entire series of 360 software has been affected by this event. Data shows that currently "about 10% of users have left, less than 20%."

Zhou Hongyi believes that Tencent is taking the opportunity to destroy 360 but emphasizes that KouKou Baojia is a legal product.

Despite this, in Zhou Hongyi's view, the competition between 360 and Tencent is inevitable, and it wasn't 360 targeting Tencent first. Instead, Tencent copied 360 Security Guard and forcibly promoted QQ Computer Manager earlier. Reflecting on this confrontation, Zhou Hongyi said that in the future, products and actions beneficial to users, 360 will still pursue, just "not so hastily next time."

Regarding rumors about 360 preparing to launch IM software, Zhou Hongyi firmly denied them, reiterating that there are no plans within 360 for an IM service. He clarified that the vice president's mention of considering IM software was only out of frustration.

"Calm down, if people need to use QQ, they still need to use it," said Zhou Hongyi.

In addition, there have been analyses suggesting that 360 might use its security platform to enter more internet sectors. Zhou Hongyi explained that Chinese internet companies like to acquire users from one point and then enter other fields. But according to him, 360 does not have such plans, evidenced by his focus on niche areas over the years.

"I am very responsible in saying, they are overthinking," said Zhou Hongyi to Sina Technology.

Tencent cannot forever be incompatible with a particular software, Zhou Hongyi said, "after this period, good products naturally attract users back." Additionally, Zhou Hongyi informed Sina Technology that he currently does not care about whether 360 can go public or not.

Below is the transcript of the conversation between Sina Technology and Zhou Hongyi:

Sina Technology: The disputes between 360 and Tencent have been intense these past few days. However, after Tencent announced "incompatibility" at 8:30 PM, your voice on this matter hasn't been heard again, which seems inconsistent with your usual style.

Zhou Hongyi: Everyone feels this is quite against my character. Tencent turned the product dispute into a coercion or mandatory action against all internet users, which shocked me greatly. Simultaneously, I believe this goes against our product philosophy. At this moment, we'd rather lose in terms of mouthpiece and product, withdraw KouKou Baojia, and hope Tencent doesn't proceed this way. We hope the conflicts between the two companies do not harm the users.

You know, I tend to speak passionately and truthfully, which may upset some companies. Stimulating words would make things worse for users, so I've kept low-profile these days. Meanwhile, the government has intervened, hoping regulators investigate thoroughly. Now, we're cooperating with the government, so I'll talk less.

Sina Technology: Did you anticipate Tencent adopting such a drastic measure before that day?

Zhou Hongyi: It was somewhat expected. Tencent dislikes KouKou Baojia and thus labels it as a backdoor or virus. A company (referring to 360) being successful for four years and then suddenly creating a trojan horse to openly misbehave isn't giving others an easy handle.

They dislike three aspects: First, KouKou Baojia performs better than QQ's built-in security functions. Second, 360 optimized some features, enhancing the QQ experience for Tencent users. By using safety technology, unnecessary dynamic loading is avoided, benefiting QQ users but disliked by Tencent who needs many value-added services to earn money and hopes users utilize all services. Tencent could offer customized services but fears losing income.

Another point is ad filtering. Filtering ads through browsers has become common practice, a user's right. Just as TV viewers can choose not to watch ads, Tencent started client-side ads. Ad filtering is popular among QQ regular users but affects Tencent's advertising revenue.

Sina Technology: Looking back now, how do you perceive the disputes between 360 and Tencent these past few days? If time could rewind, would you make the same choice?

Zhou Hongyi: I anticipated the situation but underestimated the user reaction, not expecting such a strong response. Tencent's incompatibility with other 360 products seems excessive. Originally, it was a competition between QQ's built-in security module and 360 KouKou Baojia, but Tencent made it incompatible with the entire 360 product line.

Recently, they accused KouKou Baojia of having a backdoor. When launching KouKou Baojia, we foresaw QQ upgrading for incompatibility. Therefore, KouKou Baojia included a function where executable programs were copied in compatible QQ versions. If incompatibility occurs, these programs could be restored. This is similar to anti-trojan principles; KouKou Baojia backs up executables without touching user lists or chat content.

When releasing this product, we didn't include this feature in the first version to avoid conflicts on users' desktops. After Tencent announced incompatibility, theoretically, we had experience in malware defense and could technically counteract. However, after much deliberation, we didn't engage in defense and temporarily withdrew the product, hoping Tencent wouldn't vent their anger on users.

Including today's government intervention, we have stepped back as required. I don't understand what crime using a browser constitutes. I feel Tencent's incompatibility with 360 Security Browser doesn't consider users. This time, we abandoned defense to prevent users from losing faith in us, while it's hard for users to abandon Tencent's products.

Sina Technology: Based on multiple confrontations, you don't seem like someone who gives up at the last moment.

Zhou Hongyi: I haven't given up. I'm not afraid of offending others, but what I do must have value for users. There's a reason why antivirus companies gang up on me. This time, it's different with Tencent. They're the largest client-side software with significant influence. If I insisted on pushing KouKou Baojia, Tencent's non-recognition would lead to retaliatory actions. Their power is greater than mine, causing more harm to users. So we bear some losses, choosing the lesser of two evils.

Sina Technology: Do you have any data to show how much loss we've incurred?

Zhou Hongyi: It's okay now, the loss isn't as great as imagined. Many compatibility solutions exist online. There's no fundamental conflict between chat software and security software. 360 and QQ share 70% user overlap. We've lost about 10% of users, less than 20%.

Sina Technology: In your description, you emphasize that 360 launched KouKou Baojia for the benefit of users. However, from Tencent's perspective, 360 actually planned and systematically prepared to launch an IM (Instant Messaging) software.

Zhou Hongyi: I don't have such a plan. As a product manager, I consider many factors. There are two reasons 360 won't do IM. First, most IM attempts aren't successful because there's no essential difference. Another reason is we still have many issues to resolve in security.

They fabricate a story based on their own logic. (360 doing IM) How possible is that? Until now, our actual actions prove we don't have IM. We don't even have an IM plan internally.

Sina Technology: However, a few days ago, a 360 executive mentioned considering launching IM software.

Zhou Hongyi: That was Liu Jun's (360 Vice President) angry remark due to Tencent's reckless behavior.

Calm down, if people need to use QQ, they still need to use it. QQ is now a platform. We won't enter these fields, avoiding competition. We consider how to make everyone safer. The rumor of our involvement in many businesses arises because Chinese internet companies usually acquire users from one area and expand into others.

But I've been doing unpopular things for many years. I responsibly say, they think too much.

Creating KouKou Baojia precludes making IM. An IM friend list is established by users themselves. Copying friend lists to create IM is impossible. Thus, Tencent fabricated such a conspiracy to cover the fact that they couldn't learn KouKou Baojia's functions, otherwise it would affect their income. Tencent could do it but chooses not to. Under these circumstances, Tencent made an irrational decision due to ignoring users after monopolizing the market.

Sina Technology: Do you think 360's decisions are rational?

Zhou Hongyi: I have both emotional and rational elements. Regardless of my motives, results matter. KouKou Baojia took a short development time. Its ad and plugin customization functions indeed impact QQ's revenue. Many users buy memberships to avoid ads. Now, non-members can also avoid ads, possibly affecting Tencent's subsequent value-added services.

We'll do what benefits users but won't rush next time.

Sina Technology: There are many stories about text messages between you and Pony Ma.

Zhou Hongyi: Let me tell a true story. During the 2008 Olympics, there were rumors that 360 would use pop-up windows. To clarify our stance, we created a pop-up blocker, eliminating all pop-ups. This was a product cutting off others' financial paths, and we lacked the courage to promote it, only using it for PR purposes.

At that time, Pony Ma sent me a text saying, don't create this thing, we take it seriously. I replied that we're just clarifying our stance. Back then, we only made a free pop-up blocker, yet Tencent was already tense. This time, KouKou Baojia blocking pop-up ads touched their core interests. This is why they want to eliminate KouKou Baojia.

Sina Technology: Have you exchanged text messages with Pony Ma these past two days?

Zhou Hongyi: We've been texting for many years, but recently stopped. Both sides are furious.

Sina Technology: There's a widely circulated report saying you went to Hong Kong to meet investors, resulting in the IPO plan failing. Where exactly is 360's IPO process now?

Zhou Hongyi: They're ignorant. Nowadays, there's no need to go to Hong Kong to meet investors; they come to Beijing, providing excellent service (laughs). I currently don't care much about going public; that's something investors like Shen Nanpeng care about.

Sina Technology: On Sina Weibo, there are 360 investors supporting 360. They criticize Tencent as an industry leader unable to make grand layouts in the industrial chain, instead opting for suppression and monopoly.

Zhou Hongyi: Tencent has two characteristics: full-service and suppressive strategies, preventing competitors from growing. Tencent takes client-side software rivals very seriously, suppressing them. Pony Ma once expressed in a text message: not letting you grow, but not killing you either. However, once he realized 360 had grown, Pony Ma began fiercely competing.

Now, I hear the team developing QQ Computer Manager has reached 200 people, definitely competing with 360, but some things are unavoidable. This time, our KouKou Baojia disrupted their business model, so they resorted to extreme measures.

Tencent targeted all 360 products, exposing their use of monopoly advantages to seize opportunities to eliminate 360. Tencent isn't irrational; they aim to destroy 360. Over the past four years, 360's achievements are evident. Now, Tencent portrays 360 as a virus-creating company, hiding lethal tactics, trying every means to destroy you. This has surpassed normal product competition.

Sina Technology: After this confrontation, how will 360 develop in the future?

Zhou Hongyi: I think 360 will continue to excel in security, which is our foundation. Moving forward, we'll continue improving security. According to antitrust laws, Tencent can't remain incompatible with certain software forever. After this period, good products naturally attract users back.

Sina Technology: People often see you as someone who seeks revenge. Will 360 continue targeting Tencent in the future?

Zhou Hongyi: I'm not targeting him; he's chasing me. We haven't done businesses Tencent already covers; instead, they copied 360 Security Guard and forcibly promoted QQ Computer Manager first.

We originally aimed to see whose product could reach perfection. Now that Tencent is so powerful, no one can challenge it, and we can't avoid it. Using incompatible methods, I'll step aside to keep users happy. But this time, their attack on 360 makes me feel they want to kill 360, relentlessly accusing us criminally. Yet, KouKou Baojia is a legal product. This is intimidation towards users, reflecting Tencent's monopolistic mindset.