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Microsoft falls foul of Chinese antitrust action

Microsoft has come under new scrutiny in China from the regulator, the State Administration for Industry and Commerce - known as SAIC - which stems from an antitrust investigation of major Western tech companies in 2014.

In July 2014, about 100 SAIC officials raided Microsoft offices in China, questioning executives, copying contracts and records, and downloading data from Microsoft’s servers, including email and other internal communications.

Subsequently, the Chinese regulator are seeking answers to “major questions” that arose from the data collected last year but did not provide any specific details of the investigation or their concerns.

Analysts have suggested that Microsoft’s difficulties in China arose in 2014, when the company decided to end support and security updates for Windows XP. Despite XP being a 14-year-old operating system, it was hugely popular and that in itself prevented Microsoft’s later products gaining any significant traction. By ending XP support Microsoft hoped users would be forced to replace XP by upgrading to Windows 10 and other recent, more secure operating systems. However, Microsoft may have miscalculated the reliance on Windows XP in many countries. After all, XP was - despite its age - extremely popular and used in many commercial and government offices around the world.

Therefore, with many Chinese companies and government offices running versions of old Microsoft software, the move by Microsoft to end support only highlighted the country’s reliance on Microsoft's business strategy.

China’s state-run news agency Xinhua said in an article about the investigation published on Tuesday, that Microsoft was suspected in 2014 of causing computer compatibility problems by not fully disclosing information about its Windows operating system and Microsoft Office suite of applications. “According to Chinese law,” the article said, “incompatibility without advance warning to customers could be regarded” as being anticompetitive.

A Microsoft spokesman, who spoke only on the condition of anonymity as a matter of policy, said on Tuesday that the company was “serious about complying with China’s laws and committed to addressing SAIC’s questions and concerns.”

Image Credit: Flickr / Mike Mozart