Microsoft targeted in Chinese antitrust probe

PHILIP WEN
Last updated 15:27 29/07/2014

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Chinese regulators have launched an investigation into Microsoft, the company said, in the latest setback for US tech companies viewed with growing distrust by Beijing.

Officials from the Chinese government agency that enforces its antimonopoly laws, the State Administration for Industry and Commerce, paid unannounced visits to Microsoft’s offices in four Chinese cities, a company spokeswoman confirmed.

“There was a visit from government officials to our offices,” she told the New York Times. “Given the sensitivity of the issue, I can’t say any more.”

Still considered the largest and most promising destination for global tech companies because of its huge market and the increasingly insatiable appetite for its surging middle class for the latest technology, tensions between the United States and China in particular have ratcheted up in recent months, with both sides trading accusations of spying and cyber-hacking on both sides.

In apparent retaliation, China has increased its scrutiny of American tech companies in recent months, with Chinese media naming Microsoft among other foreign technology companies as a security risk after revelations from whistleblower Edward Snowden about prolific government surveillance by the US government.

China’s government offices, which widely use Microsoft operating systems, were forbidden from upgrading to the new Windows 8 operating system due to “security concerns”, Xinhua reported, with a proprietary Chinese alternative being developed.

The visits, to Microsoft’s offices in Beijing, Shanghai, Guangzhou and Chengdu, were understood to be the preliminary stage of an antitrust investigation, which would see Microsoft become one of the world’s largest companies to fall under the eye of Chinese regulators as they ramp up their oversight in an apparent attempt to protect local companies and customers.

Qualcomm Inc, the world's biggest cellphone chip maker, is facing penalties that may exceed $US1 billion in one such Chinese antitrust probe, following accusations of overcharging and abusing its market position.

In May, Bloomberg reported that the Chinese government has started to examine the dependence of Chinese banks on computer servers made by IBM.

In April, the United States Chamber of Commerce expressed concern that Chinese authorities were using their anti-monopoly law “to advance industrial policies that nurture domestic enterprises, rather than the internationally accepted norm of using competition law to protect consumer welfare and competition.”

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It is also the latest sign of the shifting climate for foreign multinationals across other industries in China. British pharmaceutical giant GlaxoSmithKline is embroiled in a bribery scandal, while some McDonald’s restaurants in Beijing have resorted to just serving fries and drinks after their meat supply – produced by an American-owned factory in Shanghai – was halted by a food safety scandal which has also rocked KFC, Pizza Hut, Starbucks as well as McDonald's chains in Hong Kong and Japan.

SMH with Reuters 

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