Chinese mobile security firm NetQin has been accused of helping place malicious apps on users' phones to flog its own solutions.
Reports suggested the company had formed an alliance with app creator Feiliu, whose product uninstalled other anti-virus products on users' smartphones and disrupted their operability.
Concerned users then went to NetQin, which identified the app as malicious and asked affected people to pay two Yuan to remove Feiliu.
NetQin currently holds the market leader position in China for mobile security and is hoping to float in the US in 2011.
As for the link between NetQin and Feiliu, a Chinese State TV report spoke to employees of the security company, who said the two have a close partnership.
Staff from Feiliu also revealed the co-founders of Netqin and Feiliu worked on their PhDs together.
Furthermore, the report claimed NetQin had an investment of 495,000 Yuan in Feiliu, making the security company the second largest shareholder.
"All this certainly seems to suggest that the two companies are plotting together rather strategically, at the cost of the mobile phone users affected," said Mark Harris, vice president of SophosLabs, which reported the claims on its Naked Security blog.
"It seems NetQin and Feiliu have a close relationship which could threaten to damage the reputation of both companies and the security sector as a whole."
The Feiliu app itself is fairly smart. It was able to download and upload data whenever an internet connection was available, calling home for verification every six hours to ensure it was operating correctly.
NetQin and Feiliu have both moved to deny the allegations, accusing competitors of spreading slander.
Mobile app security has been under heavy scrutiny, particularly since the Google DroidDream saga.
Google had to remove 50 malicious apps capable of stealing device data from the Android Market.
