China, once the hottest growth market for US technology companies, is turning chillier.
In the latest sign of the change in climate, officials from a Chinese government agency that enforces anti-monopoly laws and other business regulations visited four Microsoft offices across China on Monday, the company said.
The officials from the State Administration for Industry and Commerce (SAIC) visited Microsoft offices in Beijing, Shanghai, Guangzhou and Chengdu, Joanna Li, a public relations officer for the company, confirmed in a telephone interview on Monday, answering questions about earlier reports in the Chinese news media.
“There was a visit from government officials to our offices,” she said. “Given the sensitivity of the issue, I can’t say any more.”
Yesterday, the SAIC announced it was investigating Microsoft.
“According to legal regulations, the SAIC has set up a case to investigate Microsoft for alleged monopoly actions,” the agency said in statement on its Web site.
The inquiry centers on its Windows operating system and the Office suite of programs, the statement said. It did not give a timeline for the investigation.
An earlier inspection last year considered allegations by companies that Microsoft bundled its products for sale and failed to disclose information about the software, causing problems with compatibility, it added.
The SAIC could not “eliminate the suspicion that Microsoft’s ... actions are anti-competitive,” the statement added.
“We aim to build products that deliver the features, security and reliability customers expect, and we will address any concerns the government may have,” Microsoft said yesterday said in a statement.
The news may add to the growing anxiety among foreign corporate executives who have watched Chinese authorities take on some of the largest Western companies, including GlaxoSmithKline, the British pharmaceutical giant whose employees in China have been accused of bribing doctors and hospital staff to use the company’s products.
However, China has used its anti-monopoly law, which went into effect in 2008, with a special zeal against US technology companies.
Last week, the state media announced that a separate regulatory body, the National Development and Reform Commission, was looking into possible antitrust violations by Qualcomm, one of the world’s largest makers of the chips used in mobile devices.
According to the Securities Times newspaper, the agency is investigating accusations that Qualcomm overcharged Chinese customers and abused its dominant market position.
Whether intentional or not, the announcement coincided with a visit to China last week by Qualcomm’s chief executive, Steven Mollenkopf, who held talks with government officials and announced the creation of a US$150 million “strategic venture fund” to invest in Chinese technology startup companies.
In May, Bloomberg reported that the Chinese government has started to examine the dependence of Chinese banks on computer servers made by IBM.
In April, the US Chamber of Commerce sent a letter to US Secretary of State John Kerry and US Secretary of the Treasury Jack Lew expressing concern that Chinese authorities were using their anti-monopoly law “to advance industrial policies that nurture domestic enterprises, rather than the internationally accepted norm of using competition law to protect consumer welfare and competition.”
Meanwhile, Chinese news media reports have named Microsoft as among the foreign technology companies likely to come under tighter government checks for security risks after the revelations by Edward Snowden about US government surveillance.
“It’s a combination of punishment and paranoia,” said James Lewis, a cybersecurity expert at the Center for Strategic and International Studies, a research group. “The Chinese government has always been suspicious of US IT products and is using Snowden as an excuse.”
Duncan Clark, chairman of BDA China, a consulting firm in Beijing, said Chinese investigations into US tech companies operating in China appeared to have gathered momentum after the US Department of Justice’s decision in May to indict the Chinese People’s Liberation Army on charges that it hacked into the networks of US companies, including the US Steel Corp.
“Previously there would be hesitation before taking on a big iconic US company and the impact it might have on trade, but not anymore,” he said. “The gloves are off.”
The targeting of US tech companies began in earnest four years ago, after Google Inc, announced that it would move most of its China-based search functions to Hong Kong.
Microsoft’s operating systems and software are widely used by Chinese businesses and government offices.
Additional reporting by AFP
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