Why Did Qihoo 360 Suspend Its Cloud Storage Service For Individual Users?

(Chinese Version)

This March, 115.com, one of the earliest cloud storage service providers in China, as well as Alibaba s UC, announced that they would partially suspend their cloud storage service. On April, 25th, Sina Weibo also announced that it would stop providing its free cloud storage service “Weipan” for users. Two days later, Thunder also announced that it would shut down its cloud storage service “Kuaipan”. Tencent announced that it would shut down its own cloud storage service on May, 27th.

After the wave of closedown in the first half of 2016, only major tech and telecom companies such as Baidu, Qihoo 360, China Telecom and China Mobile continued to provide users with the service for free. Many pundits used to believe that the market would stay stable for a while after the shut-down wave.

However, Qihoo 360 s latest statement took everyone by surprise. On October, 20th, as users logged onto Qihoo 360 s cloud storage platform, they all received a pop-up statement, saying:

Since we fail to properly manage all of the illegal content being uploaded to our servers, we are afraid that we can no longer offer free cloud storage service to individual users and will gradually shift our focus to providing cloud storage service for enterprises. Uploads would no longer be possible after Nov. 1, and all data and accounts would be deleted by Feb, 1st next year. Please download all your data in time. Thanks for accompanying us all the way.

In the statement, Qihoo 360 also said to offer refund for all its paying users.

Qihoo 360 s statement suggests that reshuffle in the Chinese cloud storage service (targeting individual users) market hasn t ended yet. More importantly, however, the statement held many people wondering: Will cloud storage service providers gradually all shut down their free service for individual users? In other words, can the few cloud storage service providers left, including Baidu, and China Telecom, etc., hang in and continue to provide the service? How can they keep the service going?

What s the fundamental reason that Qihoo 360 shuts down cloud storage service?

From Qihoo 360 s statement, we may find that it gave out the same reason to explain why it had to shut down cloud storage service for individual users: some people use cloud storage platforms to spread pirated, illegal and obscene content.

On the surface, since the spread of such content is prohibited by China s law, it s natural that Qihoo 360 takes necessary measures to prevent such behavior

However, as I have pointed out in another article, it s not this simple.

On the one hand, Chinese cloud storage service providers often offer free but huge cloud storage space to win over users, which brings the cost for providing the service too high; on the other hand, as the Chinese government s control on pirated and illegal online content tightens, cloud storage service providers also need to put in lots of money in order to review content.

As competition in the Chinese internet industry upgrades, tech companies such as Qihoo 360 has to rethink on its business scale and divert more resources on business with a clear-cut revenue model. The other days, Qihoo 360 s founder Mr. Zhou Hongyi also shared in a speech his thought on the popularity of “Free Business Model” in the Chinese internet world.

That is to say, as the Chinese internet world is getting more and more monopolized by a few first-tier tech giants, second-tier companies have to do everything they can to prevent first-tier tech giants from competing with them. That s why they have to rethink on their business scale and take necessary measures to keep up their advantages, even through shutting down part of their services.

Since Qihoo 360 is known for its virus scanner, it s reasonable that Qihoo 360 should divert its resources on internet security as the Chinese government has begun to attach high importance to the matter.

In a word, the fundamental reason Qihoo 360 decides to shut down its cloud storage service is that Qihoo 360 is shifting its focus again to other business, especially internet security. As for pirated, lewd and illegal content, Qihoo 360 can certainly deal with it well, judging from its strength in internet security.

In the short term, I believe Qihoo 360 s decision won t have much impact on other cloud storage service providers such as Baidu and China Telecom. If there are indeed any effect, the only impact I can think of is that the rankings of China Telecom s cloud storage platform “Tianyi Cloud” could rise by one in the Chinese cloud storage (targeting individual users) market, possibly thanks to its “perseverance” and “great” management.

Why do cloud storage service providers like Baidu and China Telecom continue to provide such service for individuals?

Therefore, as long as there isn t any major shift of business for Chinese cloud storage service providers like Baidu and China Telecom, they will continue to provide the service for individual users. As a matter of fact, judging from Baidu and China Telecom s recent moves, they have actually been strengthening their cloud storage service for individual users. To be more specific:

As for Baidu, it released the “Cloud Project” just recently and formally named its cloud storage platform as “Baidu Cloud Storage”. Besides, it has been strengthening its efforts to tackle pirated and lewd content. For example, in the beginning of August, Baidu s internet security department detected that a large number of external malicious IPs were trying to hit the library and lots of Baidu accounts were successfully logged in. In addition, Baidu received over 5,000 pieces of complaint from its users from various channels, arguing that their accounts were either stolen or filled with porn videos overnight. Therefore, Baidu turned to the police and later on, the police arrested the suspect Mr. Ma. He was a fishing tackle seller, but also a part-time hacker. He acquired or bought over 30 million pieces of Baidu account information for the past year and got half a million right match by hitting the library. By selling these accounts, he earned over 50,000 yuan. Therefore, Baidu does have the ability to tackle illegal content. In a larger picture, as long as Chinese cloud storage service providers attach proper importance to tackling illegal content, they can certainly solve the problem well.

What about China Telecom s “Tianyi Cloud Storage”, then? China Telecom started testing the platform near the end of 2012 and officially launched the platform in 2013. After four years of development, “Tianyi Cloud Storage” has become a typical example of a successful internet application developed by a telecom operator. Now that China Telecom continues to provide the service, it must admit the value of the cloud storage market (targeting individual users) and even plan that cloud storage service could pave the way for its attempt to integrate content and internet traffic in the new era. In addition, cloud storage service could be a great addition for its cloud-based ecosystem targeting hundreds of millions of high-resolution household broadband users. As a matter of fact, cloud storage could even be a key component of its new strategic business. Moreover, bound by corporate nature, China Telecom tends to attach higher importance to tackling illegal content, which could actually be a great thing for the cloud storage market (targeting individual users). For example, it could shut down the “Share” and “Play” function of videos and music, and develop methods to identify lewd, pirated and illegal content. There could even be a day when cloud storage service providers can share their expertise in identifying such content with regulators to help them better tackle the problem.

Should cloud storage service providers start to charge users?

When one cloud storage platform shuts down, most users would turn to two or three other platforms. Therefore, there won t be much problem for people to store their data online.

The only problem is that they might need to choose some proper alternatives as well as download their data from the original platform and and upload them to the new platforms again.

Now that there are only a few cloud storage platforms (targeting individuals) left, should they begin to charge users with a certain amount of money?

Personally, I believe the time is ripe to adjust the original strategy and think about the possibility to do so. Moreover, if users have to pay to have a certain amount of space on cloud storage platforms, they might get into the habit of storing only important files, photos and data. If so, cloud storage service providers could explore new ways to provide value-added services and form a healthier business model as a result.

By the way, as more and more cloud storage service providers shut down their service, some people might consider buying mobile hard disks. After all, nobody knows if the cloud storage platforms left would be shut down either.

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[The article is published and edited with authorization from the author @benshoushe please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.