Microsoft China Target of Potential Probe, Sina Reports

Chinese regulators met with managers at Microsoft Corp. (MSFT)’s offices in four cities including Beijing and Shanghai in preparation for a potential probe into whether the company engaged in monopolistic practices, Sina.com said.

State Administration for Industry and Commerce officials also called on Microsoft in Guangzhou and Chengdu yesterday, the news portal said on its website, citing a Microsoft China employee it didn’t identify.

Regulators may start a probe into Microsoft’s possible monopoly in China’s operating system market, Sina.com added, citing another unidentified person. China is stepping up scrutiny of U.S. technology companies, and excluded Windows 8 from a government purchasing order in May. U.S. tensions with China escalated after prosecutors indicted five Chinese military officers for allegedly stealing secrets of American companies.

“Microsoft is happy to answer the government’s questions,” the company said in an e-mailed statement yesterday, without confirming whether authorities had visited its local offices in China.

The shares of Redmond, Washington-based Microsoft fell 1.2 percent to $43.97 at the close in New York, leaving them up 18 percent this year.

China said in May it will vet technology companies for potential national security breaches, after the government threatened retaliation for a U.S. indictment of Chinese military officers on cyberspying claims.

Photographer: Nelson Ching/Bloomberg

Employees work inside Microsoft Corp.'s China headquarters in Beijing, China. Close

Employees work inside Microsoft Corp.'s China headquarters in Beijing, China.

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Photographer: Nelson Ching/Bloomberg

Employees work inside Microsoft Corp.'s China headquarters in Beijing, China.

Government Probe

A spokesman from the State Internet Information Office, cited by the Xinhua News Agency, said in May that “governments and enterprises of a few countries” are taking advantage of their monopoly status and technological edge to collect sensitive information.

Qualcomm Inc. said in November that China’s National Development and Reform Commission began an investigation related to an anti-monopoly law. The Chinese government has been stepping up corporate scrutiny as new leadership expands an anti-corruption drive and cracks down on business practices that lead to increases in consumer prices.

To contact Bloomberg News staff for this story: Daryl Loo in Beijing at dloo7@bloomberg.net; Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net; Michael Tighe at mtighe4@bloomberg.net; Pui-Wing Tam at ptam13@bloomberg.net Joshua Fellman, James Callan

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