Microsoft Corporation (MSFT) Given 20 Days Ultimatum to Answer China’s Inquiry

Microsoft Corporation

Microsoft Corporation (NASDAQ:MSFT) received an ultimatum to respond to the inquiries of the anti-monopoly regulator of China regarding the incompatibility issues related to its Windows operating system.

China’s State Administration for Industry and Commerce (SAIC) posted a notice on its website indicating that Microsoft Corporation (NASDAQ:MSFT) has 20 days to answer questions regarding the “problems like incompatibility and other issues caused by a lack of released information about its Windows and Office software.”

The anti-monopoly regulator issued its order after interviewing David Chen, the vice president for legal and corporate affairs of the software giant in China.

SAIC issued a brief statement indicating that the 20-days deadline was issued during a meeting with the staff of Microsoft Corporation (NASDAQ:MSFT) including Chen on Monday. The software giant’s management emphasized that they “strictly adhere to the relevant laws and rules in China,” and have been actively cooperating with the investigation of the Chinese anti-monopoly regulator.

Last month, the SAIC formally disclosed its investigation against Microsoft Corporation (NASDAQ:MSFT) after raiding the offices of the software giant in Beijing, Chengdu, Guangzhou and Shanghai and seized e-mails and other documents.

SAIC Head Zhang Mao recently acknowledged that the company is cooperating with the probe. He said, “After multiple meetings including at high levels, they’ve expressed a willingness to respect Chinese law and collaborate with investigating officials,” said Zhang. The anti-monopoly regulator alleged that Microsoft was not fully transparent regarding the sales information of its software, web browser and media player distributed in China.

A related report from Financial Times quoted a comment from Wei Shilin, the secretary general of Beijing and Anti-Monopoly Commission, a non-government expert organization suggesting that the SAIC is sending a message with its unprecedented rhetoric against Microsoft Corporation (NASDAQ:MSFT).

Shilin said, “Previously, the SAIC has been more discreet and quiet in carrying out cases. That was the first time ever that enforcement authorities issued such warnings on its official site, which means they are sending a message.” He added, “There is some dissatisfaction about Microsoft’s attitude.”

Shilin also noted that the SAIC issued a notice on its website four weeks ago ordering Microsoft Corporation (NASDAQ:MSFT) not to obstruct its investigation. According to him, it was also the first time for the regulator to do such action.

On the other hand, Wang Junsheng, an anti-trust lawyer at Yingke Law firm opined, “In Microsoft’s case, the alleged violations are quite severe, as incompatibility and bundling limits consumer choices, and impedes technological innovations, the main considerations in antitrust cases.”