Pot and Kettle: China Mobile Exec Bemoans WeChat ‘Monopoly’

September 12, 2013, 7:10 PM

Pot and Kettle: China Mobile Exec Bemoans WeChat ‘Monopoly’

If you’re going to defend yourself against being a monopoly, it’s good to be able to name a few competitors. Unfortunately for China Mobile Communications Corp. Vice President Li Zhengmao, his memory failed him just as he was contending that there is in fact a fair bit of competition to the Chinese telecom carrier space from Internet companies offering telecom-like services. “Many people claim there’s a monopoly,” Mr. Li said Thursday in response to a comment by Peking University economist Zhang Weiying at a panel during the World Economic Forum in Dalian. During a discussion aboutTencent Holdings Ltd.TCEHY +1.26%’s wildly successful WeChat mobile-messaging application, Mr. Zhang said the monopoly of China’s telecom sector needs to be broken up to spur more innovation.“But there are more than three [competitors]—China Telecom, China Unicom0762.HK -1.10% and…,” Mr. Li said, drifting off without coming up with any names of Internet services other than WeChat that offer real competition to China Mobile and its state-run rivals.

In an attempt to save himself, Mr. Li pointed out that China Mobile has only a two-thirds market share for mobile subscribers, with more than 700 million customers.

“A lot of people are our customers, but two-thirds isn’t monopoly,” he said. “Now more than two-thirds of users use WeChat now. I think WeChat is a monopoly now.” Mr. Li did not specify by what metric WeChat had a two-thirds market share.

Mr. Zhang attributed the disagreement to a dispute over the definition of a monopoly, before explaining that because Tencent is forced to compete in a market with free competition, it is not a monopoly.

China’s telecoms have held onto their monopoly position thanks in part to government blocks on would-be competitors. More importantly, that monopoly is now being threatened by Internet companies that sit well outside the closely controlled carrier industry. Earlier in the discussion, Mr. Li acknowledged that China Mobile “felt insecure” about the rise of WeChat, which last month had 236 million monthly active users, according to the company. China Mobile has repeatedly said companies like Tencent are eating away at revenue it gets from text messaging and voice calls.

Mr. Li also said China Mobile tried to come up with a model to compete with Tencent. The company has had a number of false starts and setbacks in pushing its own mobile-messaging apps, but few in the industry see the state-run giant, which is renowned for its bloated bureaucracy, able to challenge the likes of Tencent, which competes in China’s much more competitive private Internet industry. The company currently has two operating messaging services, neither of which have proven a serious competitor to WeChat.

Ultimately, it doesn’t matter who won the argument over the definition of a monopoly at the World Economic Forum, also known as Summer Davos. All that matters is how willing China’s government is to listen to complaints like Mr. Li’s.

After rumors spread online earlier this year that Chinese telecoms were pushing the government to require Tencent to charge for WeChat China’s Ministry of Industry and Information Technology said that Tencent should itself determine how the app is deployed. That means for now, the government seems content to watch these two so-called monopolies duke it out with some old-fashioned free-market competition.

Monopoly or not, for China Mobile, that’s good reason to be insecure.