Vivo executive hit with spending ban in Tencent app-distribution case

A court in Jinan has barred Vivo's legal representative, Shi Yujian, from flying and from staying in star-rated hotels, escalating a years-long fight with Tencent over how apps reach Chinese smartphone users.

The consumption restriction order, issued by the Jinan Intermediate People's Court over an online unfair competition dispute, is a rare move by an internet giant against a handset maker. It turns a technical argument about app-store gatekeeping into a direct constraint on a senior executive's movement.

Tencent Technology (Shenzhen) Company and Tencent Computer Systems (Shenzhen) are the applicants enforcing the order, according to case records. Vivo Mobile Communication had already been listed as a subject of enforcement before the restriction was imposed.

A dispute that dates back years

Tencent's app store, Tencent MyApp, has sued Vivo in several jurisdictions over how Vivo handsets handle downloads made outside the phone's own app store. Users who try to install MyApp or other third-party software through a browser are shown warnings, risk checks and password prompts, or are steered to Vivo's pre-installed store instead.

Vivo's position is that reviewing apps on a closed operating system is a reasonable way to protect users from malware and fraudulent charges. Tencent and other platforms argue that using control of the hardware to flag rival software and redirect users amounts to abusing technology to obstruct a competitor's product.

The rulings, and now the enforcement action, mark a judicial correction of how handset makers use the operating system to control distribution.

The fight behind the fight: channel fees

The deeper conflict is over the share of in-app spending that Chinese phone makers take. For a decade, manufacturers including those in the Hardcore Alliance, a grouping of domestic handset brands with their own app stores, have collected 30% to 50% of game and in-app payments made through pre-installed stores.

As growth in China's mobile internet slowed, Tencent, NetEase and miHoYo increasingly pushed back against those fees. They began distributing installation packages directly through official websites, private communities and their own tools, bypassing the built-in stores.

Phone makers' system-level warnings became the barrier that stopped those direct downloads. Tencent's application for the restriction order in Jinan is not only about collecting damages awarded in a judgment, but about using enforcement pressure to force handset makers to dismantle the pop-ups and blocks.

Company records and executive role

Vivo Mobile Communication was set up in June 2010 with registered capital of 65 million yuan (about $9.2 million), according to corporate records database Tianyancha. Its business covers manufacturing of mobile terminals, communications equipment and audio equipment, and it is wholly owned by Vivo Holdings.

Shi is not a nominal legal representative. He is a senior vice president and chief technology officer, and sits at the center of Vivo's technical operations. The case record runs from a court finding against Vivo on unfair competition, to the opening of enforcement, to the restriction order after the judgment was not fully satisfied.

Travel limits and reputation risk

Under Supreme People's Court rules, a person subject to a consumption restriction order cannot take flights, high-speed rail seats above second class, or stay in star-rated hotels. For a CTO coordinating research and cross-border operations at a company pushing global expansion and premium handsets, that is a direct logistical obstacle.

Vivo has the cash to pay the judgment and apply to lift the order quickly. But being pushed to this point by a competitor shows how stalled negotiations have become between hardware makers and internet platforms over how revenue is divided.

The record on Tianyancha captures a Chinese hardware giant running aground as it tries to rebuild its traffic loop. Tencent has used enforcement to breach walls the phone makers long treated as solid, and the fight over a shrinking pool of mobile users is now in public view.