Microsoft under investigation

Firm being probed for bundling media player and browser, transparency issues with Windows, Office

Microsoft Corp is now the subject of an antitrust investigation over alleged transparency issues and bundling sales, the head of one of China's antitrust regulators said on Tuesday.

Microsoft is suspected of not giving fully transparent information about its Microsoft Windows operating system and Office software, and bundling of its media player and browser in Windows, Zhang Mao, head of the State Administration for Industry & Commerce (SAIC), said at a press conference held in Beijing on Tuesday, according to the website of the State Council Information Office.

"After several meetings with SAIC, the company has shown willingness to respect Chinese law and cooperate with the probe," Zhang noted.

He also said that SAIC will provide a timely update to the latest probe of the company. However, no further details were provided about the allegations.

The probe is focused on the issue of the media player and browser bundling, Zhao Zhanling, a legal counsel with the Internet Society of China, told the Global Times on Tuesday.

"If found guilty, Microsoft could face a hefty fine. But there is also a possibility that Microsoft will receive a scaled-down punishment or even just a warning. That depends on the company's attitude during and after the probe," he noted.

The fine could range from between 1 to 10 percent of the annual sales revenue of the company according to Chinese law.

Some experts said the probe is linked to China's concerns over information security for both civilian and government users, which was fueled by exposure to the US PRISM electronic surveillance project.

To boost its counter-espionage capability, China announced in November 2013 it would set up the National Security Commission, which is headed by President Xi Jinping.

Many key areas of computer networks are controlled by foreign companies, but while the antitrust probes cannot directly help China beef up its information security, they could send a message that the companies' business in China is being regulated by the Chinese authorities, an IT industry expert told the Global Times on Tuesday on condition of anonymity.

Despite Microsoft's strong market position, some showed sympathy for the firm.

The so-called "monopoly position" of Microsoft is reasonable, Han Geng, a Beijing-based IT industry expert, told the Global Times on Tuesday.

"Although Microsoft's bundling of some of its software may harm consumers' right to know [alternatives] and right to use, it actually provides computer users a convenient and quick start," Han said.

"Microsoft provides a basic set of software that meets the basic needs of consumers such as watching videos and surfing the Internet. Meanwhile, it does not prevent advanced learners from running sophisticated software on its Windows operating systems. I admire this stance," Han noted.

On June 4, the State-run China Central Television lashed out at Microsoft's Windows 8, the company's latest operating system, over security loopholes which exposed customers' phone address book and bank account information.

On July 28, SAIC paid visits to the company's offices in Beijing, Shanghai, Guangzhou and Chengdu, starting an investigation a year after it said it had received complaints from other companies over abuse of market power.

SAIC warned Microsoft on August 4 to abide by Chinese law and not to impede the ongoing investigation.

The probe that engulfed the software giant came against the backdrop of broader anti-monopoly probes that involve many foreign companies, including chipmakers and automakers.

Zhang also said that the antitrust probe carried out by his department covers both Chinese and foreign companies in a number of sectors such as tobacco, telecom and insurance.

Microsoft declined to comment on Tuesday other than refer to a statement it had released on July 28 saying that the company is "happy to answer the government's questions."