In 2004, Jeff Xiong Minghua, a nine-year veteran at Microsoft, was dispatched from headquarters to Shanghai. The news triggered a sense of unease for Pony and his team. For years, Microsoft had flirted with the idea of expanding its services in China. To the first generation of tech companies, the idea of locking horns with the company founded by Bill Gates seemed an insurmountable challenge. Pony was about to meet his Goliath. Microsoft was a formidable competitor, partly because its instant messaging product MSN already enjoyed a significant user base in China, even without a local operation. Its user numbers...