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China turns up heat on Microsoft in probe of business practices

Following surprise spot check of Microsoft offices in the country last month, China raises new questions about the company's sales and distribution policy.

Where's Janet Reno when you need her?

A decade and a half after the United States and then-Attorney General Reno sued Microsoft in a celebrated antitrust case, China is investigating Microsoft's distribution of its Internet browser and media player. It's also looking at how the company sells its Office and Windows software in the country.

Chinese authorities are probing Microsoft's business practices in the country. Getty Images

During a Beijing news briefing, Zhang Mao, who heads China's State Administration for Industry and Commerce, said that "the investigation is presently ongoing, and we will disclose the results to the public in a timely fashion." He added that the probe is part of nine investigations China is conducting in various sectors, ranging from tobacco to telecommunications.

Zhang also said that "Microsoft is suspected of incomplete disclosure of information related to Windows and Office software, as well as problems in distribution and sales of its media player and browser."

It's not clear whether the announcement was tied to surprise inspections Chinese authorities carried out at four Microsoft offices in China last month.

Microsoft subsequently issued a statement, saying that it was "serious about complying with China's laws and committed to addressing SAIC's questions and concerns." It had no further comment.

In May 1998, the US Justice Department and 20 states sued the company, arguing that Microsoft had unlawfully leveraged a monopoly in PC operating systems. Among other things, the suit said, the company had tied Internet Explorer to Windows in such a way as to give the browser an unfair advantage over rival products. After a nine-month trial, a Federal District Judge concluded that the company had indeed broken the law. However, an appeals court later reversed the judge's conclusions, even while it upheld the monopolization charge.

The bundling question also proved problematic for Microsoft's business in Europe. The European Commission carried out its own investigation and judged the bundling of Windows with the media player to be unlawful.