Microsoft probed by regulators in China amid U.S. tension

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Employees work inside Microsoft Corp.'s China headquarters in Beijing, China. Employees work inside Microsoft Corp.'s China headquarters in Beijing, China.

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Microsoft Corp. said it’s being probed by regulators in China as U.S. companies face increased scrutiny in the world’s second-largest economy.
Government officials visited Microsoft offices in cities including Beijing and Shanghai, a person familiar with the matter said, asking not to be identified as the investigation is private.
China, which excluded Windows 8 from a government purchasing order, has stepped up the pressure on U.S. companies since American prosecutors indicted five Chinese military officers in May for allegedly stealing corporate secrets. In November, Qualcomm Inc. disclosed an investigation related to an anti-monopoly law while Microsoft, Google Inc. (GOOG) and Apple Inc.. (AAPL) have been criticized by state media since the charges were announced for allegedly cooperating with a U.S. spying program.
“From Qualcomm to Apple there seems to be a change in tone from ‘welcome’ to ‘we will take what we need,’” said Pat Becker Jr, a fund manager at Becker Capital Management in Portland, Oregon, which oversees more than $3 billion. Becker said he sees it as a broader issue and not just company specific problems.
Shares of Redmond, Washington-based Microsoft fell 1.2 percent to $43.97 at the close yesterday in New York, paring this year’s gain to 18 percent.
Regulators may start a probe into Microsoft’s possible monopoly in China’s operating system market, Sina.com reported, citing an unidentified person.
“Microsoft is happy to answer the government’s questions,” the company said in an e-mailed statement yesterday, without confirming whether authorities had visited its local offices in China.
Government probe
China said in May it will vet technology companies for potential national security breaches after the government threatened retaliation for the U.S. indictment of Chinese military officers.
A spokesman from the State Internet Information Office, cited by the Xinhua News Agency, said in May that “governments and enterprises of a few countries” are taking advantage of their monopoly status and technological edge to collect sensitive information.
Apple this month denied a report on China Central Television that software on its iPhones may result in a leak of state secrets. Last month, a commentary on the microblog of the People’s Daily website said Apple, Microsoft, Google and Facebook Inc. (FB) cooperated in a secret U.S. program to monitor China.
Qualcomm said in November that China’s National Development and Reform Commission began an investigation related to an anti-monopoly law.
The Chinese government has been stepping up corporate scrutiny as new leadership expands an anti-corruption drive among government officials and cracks down on business practices that it says lead to increases in consumer prices.

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