You may have heard the news this week that MSN’s flagship messenger would be merged into their recently acquired Skype software. In most parts of the world, it will be lights out for MSN starting in the first quarter of 2013. However, this isn’t the case for China.
Hey that’s not fair!
It turns out that China gets to keep MSN. Why is this? Well it may have something to do with the fact that at present, MSN’s Chinese users total 50-60 million people. Not bad, especially considering the iron grip that Tencent has had on the chatting market with its popular QQ software. (By the way, QQ is said to have something like 0.72 billion users.. yikes!). In the past few years, MSN has bobbed along in China at around 5% market share.
That’s not to say that Chinese users won’t get access to Skype of course (well unless.. you-know-who decide to block access). As with current MSN users in other parts of the globe, Chinese users will also have the chance to transfer their account to Skype.
The problem with China
Skype is a global internet phone company that was founded in 2003. It enables users to voice chat with each other, and also call domestic and international phones ‘IRL’ as the kids say these days. In 2007, Chinese internet company TOM announced that it would be bringing Skype to the mainland, and to achieve this they opened a joint-venture company, where TOM got 51% and Skype held on to 49% stock.
Things changed in May of last year, when the big bad company from Redmond came into the picture. Microsoft acquired Skype for 8.5 billion dollars.
That's right.. 8.5… BILLION DOLLARS!
In China, MSN is operated by Shanghai Mason, which is a company set up by Microsoft and a local enterprise called ‘Shanghai Union Trading”. When MSN and Skype merge, this will cause quite the love triangle between TOM, Microsoft, and Shanghai Union Trading. Local analysts say that TOM would still have control of Skype at the time of the merger, but what that would mean in the courtroom is hard to say.
Other analysts even go so far as to say that Skype is a VOIP client, and as Microsoft have no license to distribute such software in mainland China, its very existence under Microsoft’s control would be illegal under Chinese law.
Microsoft is already finding it hard to stay afloat in the vicious Internet market of domestic China, and merging Skype and MSN may exacerbate the problem rather than remedy it. Added to this is the fact that Microsoft doesn’t fully own MSN, this already makes it difficult for Microsoft to control the many problems that the software faces in China such as frequent downtime and excessive advertisement. Giving control over to another company isn’t Microsoft’s style, but it is almost certain that Microsoft decided to do this because the alternative would be to deal directly with the government, which is well known for putting foreign controlled companies through hell. Google and Ebay are two good examples of the things that can happen when you take on the far east.
So for now at least, it looks like MSN isn’t going anywhere. If you live in China.