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Microsoft faces anti-monopoly probe in China over Windows, Office

Chinese conducted surprise raids on Microsoft offices in the country on Monday

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China has opened an anti-monopoly probe into Microsoft over problems arising from its Windows and Office software, a government regulator said on Tuesday, a day after it conducted surprise raids of the company's offices in the country.

China's State Administration for Industry and Commerce (SAIC) has been investigating Microsoft following an industry complaint in June 2013 alleging that Windows and Office are not fully open, resulting in compatibility, bundling and document verification issues.

SAIC did not elaborate any further in its online posting. But on Monday, the regulator sent hundreds of staff to raid four Microsoft offices in Beijing, Shanghai, Guangzhou and Chengdu.

"Following the earlier stages of the investigation, we cannot dismiss suspicion of Microsoft's anti-competitiveness," SAIC added.

Microsoft employees investigated have included a company vice president, top managers, and marketing and finance related staff. Copies were taken of Microsoft contracts and financial statements, along with PC and server storage containing internal emails.

But many of the Microsoft employees SAIC wants to investigate are out of the country, meaning that the probe is not completed, the regulator said.

Microsoft declined to comment on Tuesday. The day before, the company said it was happy to answer the government's questions.

China has been a major market for the U.S. company, where its Windows OS remains the top PC operating system. In May, however, a Chinese government procurement agency began banning purchases of Windows 8 systems, taking Microsoft off guard.

The government agency has yet to explain why the ban was made. But Microsoft ending official support for Windows XP, exposing the operating system to security risks, has been cited as one reason, according to China's state-controlled press.

SAIC's investigation comes months after Chinese regulators opened an anti-monopoly probe into U.S. chip vendor Qualcomm, following complaints that the company had been overcharging clients. The investigation is still ongoing, and Qualcomm could face a major fine if found guilty.

All of this is happening as China has expressed concern about the U.S. government's secret surveillance programs being built into U.S. technology products. In May, China threatened to block companies from selling IT systems in the country if they failed to pass a new "cybersecurity vetting system" the government was working to establish.



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