Last week saw a tech company run into another problem with Chinese authority/media. No, it’s not Samsung, this time it’s the authority end of things as the State Administration for Industry and Commerce raided Microsoft’s China-based offices in Beijing, Fujian, Hubei, and Liaoning.
Also raided was IT consulting firm and Microsoft partner Accenture. The raids are a result of an antitrust investigation stemming from the concerns over Microsoft’s Windows and Office products not being legal per national compatibility and document authentication laws. This is only the latest in raids on Microsoft with the SAIC “dropping by to visit” throughout July.
In short, it’s believed that Microsoft is forcing Chinese citizens to use more Microsoft products than needed or than they would normally use.
With that said, it does raise the question of what constitutes an adequate amount of Windows and Office. Would Internet Explorer, Word, and Excel count as a good balance while adding PowerPoint means users are pushing it a bit? Is Office 2010 acceptable, Office 2007 preferred, and Office 2013 just counts as excess?
When looking at products competing in a foreign market it’s usually against a national brand. When a product carries a name like Samsung, Apple, Google, or Microsoft it’s going to give that national brand a run for its money—as evidenced by Samsung and Apple in the smartphones race.
The national word processing brand of note in China is Kingsoft Office, a partially free software suite that runs on Android, Windows, iOS, and Linux. The step of making the regulatory process and related requirements as tedious and long as TV show obstacle course, is a good way to attempt to protect those national brands from stiff competition more appealing foreign brands.
There’s also the whole “protection of state secrets” issue that China is keen on preserving. It’s generally believed that companies such as Microsoft, Apple, Google, and so on are assisting the U.S government in stealing secrets. Apple was accused in doing so on state TV with a feature in iOS. The concern has even resulted in Windows 8 is banned for government use and OneDrive was snuffed.
A combination of these reasons is a likely cause for the raids and the regulatory problems for companies. One reason is more nationalistic and protecting the brands from the country from these foreign brands that would likely dwarf it in sales at the cost of business that would be good for China. The other is protecting the military and political secrets from being compromised.
What is for certain is that China is too important a market for tech companies. There are too many potential customers for Microsoft, Apple, Google, Samsung or Facebook to simply throw up their hands and say “Ehh, it’s such a problem. Let’s skip it with the release of our new device or release it later.”