Microsoft faces anti-monopoly probe in China
Last Updated: 2014-07-30 00:20 | Xinhua/China Daily
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Microsoft responds to China's anti-monopoly probe

Microsoft probe nothing more than routine

SAIC in anti-monopoly probe of Microsoft due to partial info disclosure

China's market regulator has launched an anti-monopoly investigation into Microsoft Corp's business in the Chinese mainland, it confirmed on Tuesday.

The State Administration for Industry & Commerce (SAIC) said the investigation involved Microsoft China Co., Ltd, and three of its branches in Shanghai, Guangzhou and Chengdu. The administration said the firm had not fully disclosed anti-competition information about its Windows operating system and Microsoft Office application as required.

Inspectors are investigating a Microsoft vice president and senior managers, and have made copies of the firm's financial statements and contracts, the SAIC said in a statement on its website.

The administration has seized documents, e-mails and other data from Microsoft's computers and servers. It has not been able to complete its investigation because key personnel of Microsoft are not in China or cannot be contacted, according to the statement.

In June last year, the SAIC investigated complaints from enterprises that Microsoft had used tie-in sales and verification codes in its Windows operating system and Microsoft Office application, causing software incompatibility issues.

Microsoft failed to fully disclose information as required by the SAIC about such complaints in its reports submitted to the regulator, and may have breached China's Anti-Monopoly Law, the statement said.

Under the law, companies or individuals should not abuse their market dominance to exclude or restrict competition and should be supervised by the public.

The SAIC can require a suspected violator to submit relevant documents or materials during investigations.

The administration said a preliminary inspection had not removed suspicions related to Microsoft's alleged anti-competitive activities.

Microsoft's lawyers were present during the inspection, according to the SAIC.

Chinese antitrust agency looking into Microsoft

A photo illustration shows the Microsoft logo displayed on a Nokia phone in Vienna in this file photo taken September 3, 2013. [Photo/Agencies] 

A Chinese antitrust regulator said on Tuesday it is investigating whether Microsoft's Windows operating system and Office business suite are a monopoly. The unexpected probe comes amid an investigation of chipmaker Qualcomm's monopoly status.

Analysts said the measures targeting the US tech giants underline China's concern over technological dependency on the United States.

The State Administration for Industry and Commerce said in a statement that Microsoft's two iconic products were reported by other companies for compatibility and file verification failures because Microsoft did not disclose enough product information. Microsoft is also facing tied-in sale investigations, the SAIC said.

Nearly 100 SAIC inspectors visited Microsoft's offices in Beijing, Shanghai, Guangzhou and Chengdu on Monday, taking internal documents and two computers.

Microsoft said on Monday it is willing to cooperate with the government on the investigation.

Charlie Dai, principal consulting analyst at Forrester Research, said the investigation of Windows and Office is set to harm Microsoft's business in China in the short run but it may be hard to impact the company's long-term earnings.

"Chinese users will find it difficult to let go of Microsoft's products radically because such a move will impact their business continuity," he said.

Government procurement of Windows 7 has remained vibrant over the past months, said Dai, adding Microsoft's attitude towards the probe will play a critical role in the verdict.

SAIC is one of three antitrust watchdogs in the country, along with the Ministry of Commerce and the National Development and Reform Commission.

Microsoft is the second US tech multinational being examined for monopoly. Qualcomm, a California-headquartered mobile chipmaker, is under investigation by the NDRC to determine whether it abused dominant market position to charge high patent fees.

Earlier this month, Chinese media criticized Apple's iPhones of secretly collecting user information. Analysts worry the incident may drag down sales of the next-generation iPhone in China, the largest smartphone market.

Other recent setbacks involving a US company include the banning of IBM's server in the banking sector; Microsoft's Windows 8 ouster from government procurement deals and Symantec's data-loss prevention software being kicked out of the public security system.

Kitty Fok, China head of technology research company International Data Corp, said the regulators should consider giving guidelines to the multinationals for them to run self-evaluations. "This could be a better option for the government instead of checking everything and announcing a punishment," she said.

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