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China monopoly watchdog targets Microsoft

Offices raided amid continuing diplomatic spat between Washington and Beijing

Law and regulation, Government, Microsoft Corporation

A Chinese industry watchdog will investigate Microsoft in an anti-monopoly probe that alleges inadequate disclosures regarding Windows and Office software, Reuters reported.

China's State Administration for Industry and Commerce (SAIC) has made copies of Microsoft’s financial documents and contracts and will also target senior executives, including a vice president.

Officials raided Microsoft offices in Beijing, Shanghai, Guangzhou and Chengdu on Monday in the latest move against the US tech industry, amid a continuing row between Washington and Beijing over cyber security.

The SAIC said the action was in response to complaints from other companies, but not identify the complainants. Microsoft insisted it was not in breach of any industry regulations. "Our business practices in China are designed to be compliant with Chinese law," a spokesperson said in a statement.

Former Microsoft chief executive Steve Ballmer is famously said to have told employees in 2011 that Microsoft earned less revenue in China than in the Netherlands, despite PC sales in the Asian giant being on a par with those in the US.

"It's ironic they can be accused of a monopoly in a mostly pirated operating system market, as they were criticized for ending support to mostly non-paid versions of Windows XP," said Duncan Clark, chairman of BDA, a Beijing-based technology consultancy practice.

Others said it could be argued that Microsoft had a monopoly in China, even if the vast majority of copies of its software are pirated.

"Microsoft really has a dominant market position,” said Zhan Hao, a Beijing-based managing partner at Anjie Law Firm. “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."