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China interest in Microsoft may go beyond antitrust concerns

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The Chinese government has kicked off an investigation of Microsoft for allegedly violating the country's antimonopoly laws, but the allegations could be part of a larger tactic aimed at cripping outside companies in favor of national organizations.

The Chinese government was said to have confiscated two computers, copied numerous financial documents and collected an undisclosed volume of computer data when the officials showed up at four of Microsoft's offices in Shanghai and Beijing the week of July 28. Microsoft responded to the probe by stating that it has adhered to every element of Chinese law.

"Microsoft complies with the laws and regulations of every market in which we operate around the world and we have industry leading monitoring and enforcement mechanisms in place to ensure this,'' stated Microsoft. "Our business practices in China are designed to be compliant with Chinese law."

It wasn't the first time the tech company has been accused of wrongdoing by the Chinese government and Microsoft isn't the only foreign organization to be the target of such allegations.

Earlier in 2014, the U.S. Chamber of Commerce stated the Chinese government's swarm of monopolistic accusations have been used to hinder the progress of outsiders, in favor of homegrown businesses, after the foreign organizations have helped local products stand on their own.

"The Chinese government has seized on using the [antimonopoly law] to promote Chinese producer welfare and to advance industrial policies that nurture domestic enterprises," the chamber stated in a letter.

Robert Atkinson, president of the Information Technology and Innovation Foundation, said U.S. tech companies were more concerned about the state of the market in China than they were just a few years earlier. The tech companies feel "the rug is being pulled" from under their feet, stated Atkinson.

While not stating that Microsoft has violated any antimonopoly laws in China, Zhan Hao, a managing partner at Anjie Law Firm of Beijing, said Microsoft's size and its presence in China make the company likely to do so.

"Microsoft really has a dominant market position -- people rely on it very much and its market share is very high, so this would likely lead to an abuse of its dominant market position," said Hao. "Alternatively, Microsoft could, through its market position, restrict competition for other business and competitors."

 

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