Home / Technology / Microsoft Faces New Scrutiny in China

Microsoft Faces New Scrutiny in China


Microsoft offices in Beijing in 2014. New scrutiny of the company by the State Administration for Industry and Commerce stems from antitrust investigations of major Western technology companies in 2014. Credit Ng Han Guan/Associated Press

HONG KONG — A Chinese regulator said on Tuesday that it would open a new antitrust investigation of Microsoft, related to electronic data that the government collected as part of an earlier inquiry.

Despite Microsoft’s recent steps to improve relations with the Chinese government, the announcement is a reminder of the regulatory challenges that multinational companies face in the country, one of the world’s largest technology and consumer markets. Last year, Qualcomm paid a fine of $ 975 million for violating China’s antimonopoly law, and in 2014, Volkswagen and Chrysler were fined a total of $ 46 million for violating antitrust rules.

The new scrutiny of Microsoft by the regulator, the State Administration for Industry and Commerce — known as SAIC — stems from antitrust investigations of major Western tech companies in 2014.

In July of that year, about 100 SAIC officials stormed four Microsoft offices in China, questioning executives, copying contracts and records, and downloading data from the company’s servers, including email and other internal communications.

The Chinese regulator said it was seeking answers to “major questions” that arose from the data but did not provide any further details of the investigation on Tuesday. Analysts have said that Microsoft’s difficulties in China began in 2014, when the company decided to end support and security updates for Windows XP, an aging software line that it hoped users would replace by upgrading to Windows 10 or other recent operating systems.

With many Chinese companies and government offices running versions of old Microsoft software like XP, the move highlighted the country’s reliance on the American company. Even though the bulk of Chinese users of Microsoft software acquired pirated versions without paying Microsoft, the company was nonetheless criticized for ending support in favor of its newer software.

In an article about the investigation published on Tuesday, China’s state-run news agency Xinhua said that Microsoft was suspected in 2014 of causing computer compatibility problems by not fully disclosing information about its Windows operating system and Microsoft Office suite of applications. “According to Chinese law,” the article said, “incompatibility without advance warning to customers could be regarded” as being anticompetitive.

A Microsoft spokesman, who spoke only on the condition of anonymity as a matter of policy, said on Tuesday that the company was “serious about complying with China’s laws and committed to addressing SAIC’s questions and concerns.”

Microsoft has sought in recent months to improve its relations with China’s government. The company held a prominent meeting of Chinese and American tech leaders in Seattle in September that was a major stop of the Chinese president, Xi Jinping, during his tour of the United States. Microsoft’s founder, Bill Gates, also hosted Mr. Xi at his house.

During the meeting, Microsoft announced several partnerships, including a cooperative effort with the China Electronics Technology Group, a state-run company that makes technologies to support the Chinese military. That effort is meant to help tailor Windows 10 to the demands of the Chinese government.


NYT > Technology

Leave a Reply

Your email address will not be published. Required fields are marked *