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Microsoft Offices Raided Throughout China

In its latest effort to apparently reign in large U.S. tech companies from expanding their presence in China, government investigators in China this week raided Microsoft offices throughout the country, according to several reports.

The raids by China's State Administration for Industry and Commerce included offices in Beijing, Shanghai, Guangzhou and Chengdu, according to a report Monday in The New York Times, citing a spokeswoman who declined to elaborate due to the sensitivity of the issue. Another Microsoft spokesman told The Wall Street Journal that the company's business practices are designed to comply with Chinese law.

Accusing Microsoft of monopolistic practices and other violations that are less clear, the raids are the latest salvo in tensions between the two countries over the past few years which have been recently escalated by spying, malware attacks and hacking allegations. The move could also be retaliation by the Chinese government following indictments by the U.S. government in May that charged five of China's Army officers with cyber attacks, The New York Times added.

The raids follow a visit to China last week by Qualcomm CEO Steven Mollenkopf, according to the report, which said he held talks with government officials and announced a $150 million "strategic venture fund" to invest in Chinese technology start-up companies, though it's unclear whether the visit sparked the escalation against Microsoft.

Microsoft, which, like many U.S. corporations, has identified China as one of its largest growth markets, is not the only company in the country's crosshairs these days. Government officials have also started to explore the reliance by Chinese banks on IBM mainframes and servers, though Big Blue has agreed to sell its x86 x Series server group to Lenovo for $2.3 billion. Apple, Cisco and Google have also faced heighted scrutiny, according to reports.

Approximately 100 investigators raided Microsoft's offices in China, according to The Wall Street Journal, which reported Tuesday that China's State Administration for Industry and Commerce vaguely accused Microsoft of not disclosing certain security features and how the company integrates its various products. China's government, through state-controlled news outlet CCTV, has raised concerns about the security of Windows 8 and also has deemed Apple's iPhone as a danger to the country's national security.

Disclosures by Edward Snowden of the surveillance efforts have also escalated concerns by China's government, several reports noted. Yet some wonder if the moves are more about protectionism of companies based in China than concerns about security.


Posted by Jeffrey Schwartz on 07/30/2014 at 12:37 PM


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