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Chinese officials seize Microsoft PCs, emails, financial info in antitrust probe

Gregg Keizer | July 30, 2014
State-run media ratchets up the rhetoric after sudden swoops into Microsoft offices Monday.

As Thompson said, Microsoft has refused to budge on retiring Windows XP, whether across the board or in China only. In March, after some Microsoft customers got the impression that the company was going to patch Windows XP systems in China after April 8 -- the target retirement date -- Microsoft was quick to reply, saying that China would not get special treatment.

At the time of the Windows 8 ban, Xinhua, which often speaks for the government, described it as one way for China to avoid a repeat of the aged OS's widespread use and its exit from support. "The Chinese government obviously cannot ignore the risks of running OS without guaranteed technical support," Xinhua said in May. "It has moved to avoid the awkwardness of being confronted with a similar situation again in future if it continues to purchase computers with foreign OS."

Microsoft has long had a China problem, particularly with the country's rampant software piracy. In 2011, then-CEO Steve Ballmer noted that while China was the world's largest country, with 1.3 billion people at the time, revenue there was less than what was collected from customers in the Netherlands, a nation of only 17 million.

According to Ballmer, Microsoft's China revenue was just 5% of that in the U.S., even though the number of personal computers in the two markets was about equal.

If that comparison remained accurate, Microsoft's revenue in China would have been approximately $2.1 billion in the firm's 2013 fiscal year -- the 12 months that ended June 30, 2013 -- and the last period for which figures were available.

That amount -- about 2.7% of Microsoft's total revenue for fiscal year 2013 -- made Thompson question a business-as-usual reaction from the Redmond, Wash. company.

"If I'm right, I think Microsoft has to think seriously about abandoning the country. It would be a very painful decision, but I simply think it is too difficult for any Western software or services firm to compete in China," said Thompson, who lives in Taiwan.

However, in the next breath Thompson pointed out that such a move "will never happen," and cited the partnership with 21Vianet, a China-based datacenter company that now offers the Microsoft Azure cloud services in the country, as one clue.

Yesterday, Microsoft said it would cooperate with the investigation and would "address any concerns the government may have."

Repeated email messages requesting comment and additional information from SAIC have been returned undelivered, with the contact email address listed on the agency's English-language website citing an error of "Exceed User's quota size limit ... this is a permanent error, I've given up. Sorry it did not work out."

 

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