China turns up antitrust heat on Microsoft

2014 probe continues as regulators demand Microsoft explain 'major issues' in seized financial, contractual information

In a cryptic statement, Chinese government regulators today demanded that Microsoft explain "major issues" in data authorities collected from the company last year during an antitrust investigation.

It was the first time in more than a year that China's State Administration for Industry and Commerce (SAIC) hinted that its probe is continuing.

China's investigation into Microsoft began in August 2014 with raids on Microsoft offices in Beijing, Chengdu, Guangzhou and Shanghai.. At the time, SAIC -- one of several agencies in the People's Republic of China (PRC) that enforce antitrust law -- said it was after information about how Windows and Microsoft Office were bundled, about Windows-Office compatibility, and about other unnamed concerns after fielding complaints since mid-2013.

During those raids, authorities seized Microsoft computers; collected internal emails, contracts and financial information; and interviewed senior managers and other personnel in the company's marketing and finance departments.

Tuesday's statement by SAIC did not spell out what Microsoft would be required to explain, but the agency demanded that the American firm submit its defense in "a timely manner."

Highlighting the government's move, both The People's Daily -- the Communist Party's official organ -- and the state-run Xinhua news agency published pieces on the announcement.

Some Western analysts opined last year that the probe had been triggered by Microsoft's April 2014 retirement of Windows XP, the 2001 operating system that had been aggressively pirated by Chinese consumers and businesses to run their personal computers.

China reportedly had asked Microsoft to extend the lifespan of XP -- continue serving security patches for the aged OS, in other words -- if only to PRC customers. After Microsoft retired XP, and confirmed that Chinese users would not get preferential treatment, authorities there banned the use of Windows 8 on government computers, a move some claimed was a reaction to the end of Windows XP's support.

Windows XP's global user share for December was 10.9%, said U.S.-based analytics company Net Applications on Friday. But according to Baidu -- China's largest search provider -- XP powered 33.4% of the country's PCs last month, second only to Windows 7's share of 52.4%.

SAIC's continued investigation of Microsoft comes even after the Redmond, Wash. technology vendor has made several recent moves in the PRC to shore up support. In September, Microsoft struck a deal with Baidu to promote Windows 10 and its free upgrade to consumers there. Then three weeks ago, the company expanded an existing partnership with one of China's largest defense and technology conglomerates, announcing a joint venture to license Windows 10 to government agencies and some state-owned corporations in critical infrastructure sectors such as energy, telecommunications and transportation.

Microsoft did not immediately respond to a request for comment on SAIC's call for an explanation.

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