The State Administration for Industry and Commerce (SAIC) announced last month that it was investigating Microsoft over its Windows operating system — which is used on the vast majority of computers in China — and the Office suite of programmes.
However, analysts also noted that while PC OS has not been a principal focus of attention of China’s antitrust regulators, China has potentially eight domestic competitors to Microsoft in the OS sphere, and that there market share has been growing in part through government procurement efforts. While OS is a basic platform for building computer systems and services, these analysts noted Microsoft’s technological depth in this area has brought it many competitive advantages.
Zhang Mao, head and Communist Party chief of the SAIC, told a news conference in Beijing that Microsoft had failed fully to disclose information about its software.
He added the agency, one of the government bodies which enforces China’s anti-monopoly law, was also looking into “issues” with Microsoft’s media player and browser, according to a transcript posted online.
History also offers little guidance, in part because of Microsoft’s extensive involvement in a range of tech sectors. A Hong Kong based company reportedly accused Microsoft of discriminatory and excessive pricing for its software products in 2012 in a case in Guangdong. .” On a positive note, however, Microsoft’s merger with Nokia was also recently approved by China’s antitrust regulators
Microsoft has previously faced anti-trust investigations in other markets for tying the company’s Windows system to its other products.
The European Commission fined it $731 million in March last year for failing to offer users browser choices beyond its own Internet Explorer.
“Through repeated contact with Microsoft, their top-level executives have shown respect for China’s laws, (and) cooperated with China’s anti-monopoly investigation,” Zhang said.
Microsoft has said it seeks to comply with Chinese law. Its comments came after the official announcement of the investigation, which included raids on its offices in the country.
In May China also banned the use of Microsoft’s Windows 8 operating system on all new government computers, as reports alleging security concerns circulated.
State media have blasted Microsoft for its share of the operating system market in China, claimed to be as high as 95 percent, saying it forms a “de facto monopoly”.
China — which is embroiled in a long-running cyber spying row with the US — is planning to introduce a homegrown operating system as early as October to reduce the country’s reliance on Microsoft, the official China Daily newspaper reported on Tuesday.
The Microsoft probe comes as foreign firms doing business in the huge Chinese market face apparent greater scrutiny.
U.S. tech companies are in the horizontal and vertical cross hairs. They’re between a rock and a hard place right now. – Duncan Clark, chairman of BDA China, a Beijing investment advisory firm Google services such as Gmail and Maps have been increasingly stifled this year by China’s “Great Firewall” — the country’s censorship and surveillance program — while Facebook and Twitter remain blocked on the mainland. Last month state-run TV aired a report on the iPhone’s tracking feature that suggested the devices could be used to expose state secrets.
China says it’s simply enforcing antitrust rules and looking out for national security. But the regulatory moves — coupled with increasingly heated rhetoric against Silicon Valley giants and strong calls by Chinese leaders for homegrown tech innovation — are raising fears of a tougher business climate and a new burst of protectionism.
“U.S. tech companies are in the horizontal and vertical cross hairs,” said Duncan Clark, chairman of BDA China, a Beijing investment advisory firm specializing in the tech sector. “They’re between a rock and a hard place right now.” It’s not just U.S. tech firms like Microsoft and Qualcomm feeling the pressure in China. These days, foreign companies of all kinds — including Japanese and German carmakers and European drug manufacturers — are being ensnared in anti-monopoly investigations.
A number of experts say that’s the natural result of China ramps up enforcement of its anti-monopoly law, which is just 6 years old.
“China has been way behind the West in terms of antitrust law, but they’re rapidly accumulating more experience in interpreting and enforcing the law,” said Huang Yong, a professor at Beijing’s University of International Business and Economics and member of the State Council’s anti-monopoly committee advisory panel.
But the Chinese government is casting high-tech companies as a particular threat as the two countries trade cyber spying and hacking allegations.
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