Microsoft gets warning: Don't block watchdog

Updated: 2014-08-05 06:49

By Gao Yuan (China Daily USA)

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An antitrust regulator warned Microsoft Corp in a strongly worded announcement on Monday not to obstruct an ongoing monopoly investigation.

The warning came less than a week after the United States company's two flagship software products became the subjects of antitrust investigations in China.

The State Administration for Industry and Commerce said it had questioned Microsoft's Deputy General Counsel Mary Snapp on issues related to the monopoly investigation.

Microsoft was asked to obey Chinese laws.

Microsoft gets warning: Don't block watchdog

"The SAIC formally told Microsoft not to interfere in the investigation process," said an announcement on the administration's website.

"Microsoft promised to respect Chinese law and fully cooperate with the SAIC's investigation," it said.

The formal investigation began on July 29 when nearly 100 investigators from the administration swooped on four Microsoft offices in Beijing, Shanghai, Guangzhou and Chengdu. They took away internal documents and two desktop computers.

The regulator said later that Microsoft's Windows operating system and Office business software were under monopoly investigation because of compatibility, bundling and document authentication problems.

Bryan Wang, principal analyst at Forrester Research Inc, said the investigation reflects China's tightening grip on overseas-made information technology products after former intelligence contractor Edward Snowden leaked a year ago the massive surveillance program led by the US government.

"Growing information security concerns have given China a perfect reason to oust overseas-made IT products from key sectors such as energy, banking and government use," Wang said.

Microsoft gets warning: Don't block watchdog

Microsoft is the second foreign IT vendor to come under a monopoly investigation in China.

Last year, US chip maker Qualcomm Inc was investigated by the National Development and Reform Commission - another antitrust agency - over abuse of market dominance status.

Qualcomm could face up to $1.2 billion in fines under China's 6-year-old anti-monopoly law. The investigation is in the final stage and a decision will be announced soon, according to an NDRC official.

Wang Jingwen, an analyst at international research company Canalys, told China Daily that if Microsoft is given a big fine in China, it could lead to increased prices for its devices, which may undermine the company's smartphone sales.

Microsoft is trying hard to increase the market share of phones using the Windows operating system in China, where Google Inc's Android holds a more than 85 percent share.

Microsoft is also cutting jobs worldwide at the newly purchased Nokia handset group. Android phones are a key product line for Nokia.

(China Daily USA 08/05/2014 page1)