China gives Microsoft 20 days to explain software compatibility in antitrust probe


Chinese regulators are giving Microsoft just under three weeks to answer questions relating to how Microsoft's Windows OS integrates with the company's Office bundle.

The news comes after a Chinese investigation team questioned Microsoft Vice President David Chen on what the investigators allege are antitrust activities in China.

"(A) special investigation team conducted an anti-monopoly investigation inquiry with Microsoft Vice President Chen Shi (David Chen), and required that Microsoft make a written explanation within 20 days," said a statement from the State Administration for Industry and Commerce (SAIC) offices in China.

Official state-run media Xinhua reported Microsoft's use of verification codes also "may have violated China's anti-monopoly law." These verification codes are used by companies as an anti-piracy mechanism, and are only provided with legitimate copies of the software.

Microsoft is one of over 30 U.S. technology firms under investigation by officials in China as the Chinese government seeks to enforce six-year-old antitrust laws. According to critics, the law is being unfairly used to target foreign companies, a claim that regulators deny.

Microsoft has been feeling the bite of China's antitrust laws and this has had a negative effect on sales in China. Former Microsoft CEO Steve Ballmer reported that the company made less revenue in China than in the Netherlands.

In fact, in recent weeks Chinese officials have done things like seize emails and other materials from Microsoft offices. Many of China's suspicions are tied to the Edward Snowden revelations regarding the National Security Agency and its spying practices on other countries.

"It's hard to make sense of and hard to see how Microsoft can appease," said Duncan Clark, chairman of BDA, a Beijing-based tech consultancy firm. "How does an anti-piracy measure constitute monopolistic behavior if other suppliers can also use the same technique?"

Microsoft says it will comply with Chinese demands in the hope that this will put an end to the suspicion that it has been facing in the country.

"We strictly adhere to the relevant laws and rules in China and we have been actively cooperating with the SAIC's investigation," said the company in a statement.

The SAIC has previously stated it suspects that Microsoft has not fully disclosed all issues related to compatibility of its software and operating system.

In the past week Chinese probes have also targeted Microsoft's media player as well as Internet Explorer and other default applications on the Windows operating system.

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