Microsoft's Chinese offices raided over alleged antitrust allegations

Chinese media reports suggest the investigation could focus on Microsoft's "de facto monopoly" in China's OS market.

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The Windows 8.1 Start screen YouTube/Screenshot by Lance Whitney/CNET

An antitrust investigation is apparently the cause for a recent raid that shook up Microsoft's offices in China.

On Monday, China's State Administration for Industry & Commerce visited Microsoft offices in Beijing, Shanghai, Guangzhou, and Chengdu. The officials reportedly took away documents and computers but didn't reveal the reason behind the investigation.

In a story published Tuesday by Chinese-based Sina News, Microsoft China told a reporter for the Beijing News that the SAIC investigation relates to antitrust issues. The specific reason still isn't clear, and Microsoft has said simply that it will cooperate with the investigation and answer any related questions.

Microsoft has had a dicey relationship with China. In May, China announced it would ban Windows 8 from government computers allegedly due to security concerns. The following month, the reason became more clear as a China state-run broadcaster issued claims that Microsoft could use Windows as a secret backdoor channel to collect data on Chinese citizens. China has also accused such companies as Google and Apple of cooperating with the US government to gather data and steal state secrets.

But China also faces withdrawal issues from a massive addiction to the no-longer supported Windows XP. Microsoft has long accused China of the piracy of Windows. In 2011, former CEO Steve Ballmer told employees that Microsoft's revenue in China represented only 5 percent of sales in the US although the two markets were about the same size, according to The Wall Street Journal. As such, a larger number of the PCs in China still running Windows XP may be using illegal and now unsupported copies, which could eventually force upgrades to Windows 8.

China's new antitrust investigation could be focused on "unfair trade," which includes such issues as the abuse of market dominance and price monopoly, according to an attorney with a Shanghai State law firm cited by Sina News. An unnamed employee of Microsoft China linked the investigation to the company's alleged monopoly in China's operating system market, China's National Business Daily said on Tuesday, according to The Guardian.

"Microsoft's operating system software occupies a 95 percent share of the market in China, forming a de facto monopoly," the National Business Daily said.

Another industry source said the case could center on Microsoft's practice of bundling and selling several of its products together.

CNET contacted Microsoft for comment and will update the story with any further details.

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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