China orders Microsoft to explain Windows, Office practices within 20 days

Chinese antitrust regulators today ordered Microsoft to explain compatibility and bundling issues.

Chinese antitrust regulators today ordered Microsoft to explain compatibility and bundling issues with its software and gave the U.S. company 20 days to comply.

The brief announcement on the website of China's State Administration for Industry and Commerce (SAIC) (Chinese language version) was the latest move in the government's antitrust investigation of Microsoft, which faces an unknown number of charges.

Microsoft must reply to the SAIC's demands in writing, the agency said.

In a translation by the Wall Street Journal (subscription required), which reported on the SAIC's newest demands, the agency said Microsoft must explain "problems like incompatibility and other issues caused by a lack of released information about its Windows and Office software."

The demand was made during a meeting Monday with David Chen, Microsoft's general manager for legal and corporate affairs in China.

The latest from the SAIC was another in a steady drumbeat of allegations the government has leveled at Microsoft. In July, antitrust regulators and police raided several Microsoft offices, seizing computers and documents in a first step of an investigation. The probe was prompted by complaints lodged since July 2013 about how Windows and Microsoft Office are bundled, about Windows-Office compatibility and about other unnamed concerns.

Since then, officials have warned Microsoft that it must cooperate and then last week claimed that the company has not complied with the investigation even as it demanded more information about distribution of the Windows Media Player and the Internet Explorer (IE) browser.

Microsoft has repeatedly pledged to comply with government requests and cooperate with the probe. "We're serious about complying with China's laws and committed to addressing SAIC's questions and concerns," a company spokesperson said in early August.

The SAIC, however, has released little information about the investigation, and Microsoft has been just as tight-lipped.

Chinese authorities have long been at odds with Microsoft, but the disputes ramped up significantly this spring when officials banned the use of Windows 8 on government computers and criticized the company for stopping security updates to the 13-year-old Windows XP.

Some analysts believed that the Windows 8 ban was a tit-for-tat response to the U.S. Department of Justice's allegations against five Chinese hackers with links to the People's Liberation Army (PLA), China's military. In May, the DOJ accused the five of breaking into numerous U.S. companies' networks and stealing trade secrets and intellectual property.

Other experts, however, tied the probe to the dominance of Windows on China's personal computers, a fact that has gnawed at the government, which has tried for years to replace foreign-made software and operating systems with domestic substitutes. According to Irish metrics company StatCounter, Windows accounted for 97% of China's operating system "usage share," a measurement of which OSes online users run on their personal computers. About 39% of all Windows-powered PCs in the country still ran Windows XP in August; a majority of 54% ran Windows 7.

Last week, the head of an operating system development alliance created in March announced that a homegrown OS could launch as early as October.

Not surprisingly, both the government-run Xinhua News Agency and the People's Daily, the Communist Party's official newspaper, reported on the Monday demands made of Microsoft. Xinhua also said that "initial results [of the investigation] will be promptly announced to the public."

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