Industry watchdog probes Microsoft

Tech firm asked to explain compatibility issues

China's anti-monopoly regulator on Monday asked Microsoft Corp to explain issues related to the compatibility of its Windows operating system and Office software suite within 20 days, the latest move in its antitrust probe into the software giant.

The State Administration for Industry and Commerce (SAIC) questioned Microsoft Vice President Chen Shi on Monday. After complaints by some enterprises about compatibility issues with the Windows operating system and Office software, the administration asked Microsoft to give a written explanation within 20 days, according to a SAIC statement posted on its website.

"We're serious about complying with China's laws and committed to addressing SAIC's questions and concerns," read a Microsoft statement sent to the Global Times on Monday.

It is the fourth statement issued by the SAIC on the progress of the probe into Microsoft which began on July 28. On August 26, Zhang Mao, head of the SAIC, told a press conference that the authorities will provide timely updates on the progress of the probe.

Zhang also said Microsoft is suspected of not giving fully transparent information about its Windows operating system and Office software, as well as bundling of its media player and browser in Windows.

The SAIC has given Microsoft the chance to explain why it has withheld the information, lawyers said.

According to China's Anti-Monopoly Law, if Microsoft has valid reasons for withholding the information or bundling sales, the behavior could not be treated as abuse of its dominant market position, said Wei Shilin, an expert with the Beijing Lawyers Association.

"Microsoft might justify its behavior on security grounds," Wei told the Global Times on Monday. "But considering previous investigations it faced in other markets such as the European Union (EU), such reasons did not work well."

In March 2013, the EU fined Microsoft 561 million euros ($778 million) for failing to offer personal computer (PC) users a choice of Internet browsers when they install the Windows operating system.

Industry watchers estimated that Windows account for more than 90 percent share of PC operating system in China.

"Microsoft's behavior has hurt the growth of homegrown software developers as well as Chinese consumers' interests for long," Dong Zhengwei, a lawyer with Beijing Liang Gao Law Firm, told the Global Times on Monday.

Dong filed a complaint against Microsoft with the country's three anti-monopoly regulators, which also include the Ministry of Commerce and the National Development and Reform Commission, on July 31, 2008, one day before China's Anti-Monopoly Law took effect.

He requested the ministry to launch an antitrust investigation into Microsoft for an alleged abuse of its market dominance, discriminatory pricing and technology monopoly in China, and suggested imposing a $1 billion fine on the tech giant. But the complaint did not immediately lead to an official investigation.

Chinese anti-monopoly authorities have stepped up efforts to crack down on irregularities by a wide range of domestic and foreign companies since 2013, with tech giants, automakers and telecom firms being probed or fined.

Dong also noted that compared with SAIC's previous strongly worded statements on Microsoft, the latest statement is relatively mild.

On August 4, the SAIC warned Microsoft in a statement to abide by China's law and not to impede the investigation.

"There is increasing possibility that Microsoft will receive a scaled-down punishment," he said.

Companies that abuse their market position may face fines ranging from 1 to 10 percent of their annual sales revenues, according to Chinese law. Despite a dominant position in software, Microsoft is facing increasing challenges from domestic rivals in the instant messaging sector.

The US firm said Monday that it will shut down the Windows Live Messenger (MSN) service in China on October 31 and migrate MSN users to Skype.

The majority of the Chinese netizens use Tencent's instant messaging platform QQ and its WeChat service, which reportedly has 438 million active users by the end of June.