Microsoft Corporation (NASDAQ:MSFT) Not Transparent with Sales Data: China

Microsoft Campus
A building on the Microsoft Headquarters campus is pictured July 17, 2014 in Redmond, Washington. (Stephen Brashear/Getty Images)

Microsoft Corporation (NASDAQ:MSFT) was not fully transparent regarding the sales information of its software, web browser and media player distributed in China, according to an antitrust regulator in the country.

Last month, officials from the State Administration for Industry and Commerce (SAIC) for the People’s Republic of China raided the offices of Microsoft Corporation (NASDAQ:MSFT) in Beijing, Chengdu, Guangzhou and Shanghai. At the time, the regulators did not disclose the purpose of their visit, but technology observes suggested that the software giant might be the subject of scrutiny.

The SAIC formally disclosed this month that Microsoft Corporation (NASDAQ:MSFT) is under investigation. The software giant’s deputy general counsel Mary Snapp met with the Chinese anti-monopoly regulator in Beijing to answer questions.

During a media briefing in Beijing, SAIC head Zhang Mao said Microsoft Corporation (NASDAQ:MSFT) is cooperating with the ongoing investigation. “After multiple meetings including at high levels, they’ve expressed a willingness to respect Chinese law and collaborate with investigating officials,” said Zhang.

Earlier this month, SAIC stated that Microsoft Corporation (NASDAQ:MSFT) is under investigation on allegations that it is violating the anti-monopoly law in Chiba since last year. The alleged violation was connected to the compatibility problems, bundling and document authentications for the Windows operating system and Microsoft office software.

According to Zhang, “The investigation is presently ongoing, and we will disclose the results to the public in a timely fashion.” He added that Microsoft Corporation (NASDAQ:MSFT) is not the only company under scrutiny in the country.

SAIC opened nine investigations this year involving companies engaged in insurance, telecommunications, tourism, and utilities industries. According to Zhang, the nine companies are composed of domestic, foreign, state-owned enterprises and trade associations.

Some of the foreign companies under investigation include Qualcomm, Inc. (NASDAQ:QCOM) and Daimler AG (ETR:DAI). The investigation reignited concerns regarding China’s protectionism.
GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) was previously accused of “economic crimes” while Merck & Co. (NYSE:MRK) underwent investigations during the wake of price fixing scandals in China.

Separately, China is hoping to launch a Chinese-made desktop operating system by October. The move is part of the government’s effort to reduce the country’s dependency from foreign software such as the Windows operating system.

Earlier this year, the China prohibited the use of Windows 8 OS on government computers after Microsoft Corporation (NASDAQ:MSFT) ended its support for Windows XP on April.