Exclusive: Microsoft CEO Nadella to visit China amid antitrust probe - source

BEIJING/SEATTLE Thu Aug 28, 2014 4:41pm EDT

Satya Nadella, Microsoft Corp chief executive, attends the unveil event of the new Microsoft Surface Pro 3 in New York May 20, 2014.  REUTERS/Brendan McDermid

Satya Nadella, Microsoft Corp chief executive, attends the unveil event of the new Microsoft Surface Pro 3 in New York May 20, 2014.

Credit: Reuters/Brendan McDermid

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BEIJING/SEATTLE (Reuters) - Microsoft Corp Chief Executive Officer Satya Nadella is set to visit China in late September, the company said on Thursday, as the Chinese government conducts an antitrust investigation into the world's largest software company.

It is not clear if Nadella, who took over as Microsoft CEO in February, will meet with any Chinese government representatives as part of his visit, or try to resolve issues with the State Administration for Industry and Commerce (SAIC), one of China's antitrust regulators.

SAIC officials could not be reached for comment.

Microsoft, which normally does not comment on executive travel plans, acknowledged the trip but tried to defuse any tension around the antitrust issue.

"Satya's trip was planned before the Chinese government investigation began," said a company spokesperson. "We're committed to complying with China's laws and addressing SAIC's questions and concerns."

Microsoft is one of many foreign firms to have come under scrutiny as China seeks to enforce a 2008 anti-monopoly law, which some critics say is being used to unfairly target overseas businesses.

Foreign CEOs often pay calls on the world's second-largest economy to strengthen business and political ties. Nadella would be at least the second major tech executive to have visited the country as antitrust tensions simmer.

Qualcomm Inc President Derek Aberle, looking to end to the wireless chip giant's own antitrust scrutiny, met with China's National Development and Reform Commission (NDRC) last week.

Nadella's predecessor, Steve Ballmer, visited China four times in the past five fiscal years, Microsoft said. It is not clear that Microsoft achieved much with such high-level executive appearances in a country where Windows and Office are widely pirated. Ballmer said in 2011 that Microsoft got more revenue in the Netherlands than China.

Microsoft Deputy General Counsel Mary Snapp already met with SAIC officials in Beijing earlier this month to discuss the antitrust matter.

Despite the rampant Windows piracy, China's SAIC initiated an antitrust probe into Microsoft earlier this month, saying that the company may have broken anti-monopoly laws regarding compatibility, bundling and document authentication for its Windows operating system and Office suite of applications.

On Tuesday, SAIC head Zhang Mao said at a briefing in Beijing his organization - one of three antitrust regulators in China - was focusing on Microsoft's web browser and media player, and suspected the company had not been fully transparent with information about its Windows and Office sales.

The investigation has been met with puzzlement outside China, given that Microsoft settled U.S. and European antitrust cases around Windows more than a decade ago, and its desktop software monopoly is now largely irrelevant with the explosion of tablets and phones running Apple Inc or Google Inc software.

The probe comes amid a spate of antitrust probes against foreign firms in China, including Qualcomm and German car maker Daimler AG's luxury auto unit Mercedes-Benz, renewing fears of Chinese protectionism.

(Additional reporting by Bill Rigby in Seattle)

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Comments (3)
SonyJim wrote:
It’s not so much an anti-trust thing, as it is an absolute no-trust issue now for Microsoft… The good news for China is it not necessary to keep them around. The company is part of a network of Trojans that has been diagnosed as malignant. So why take the risk and allow that tumor to grow? Chop chop!

Aug 27, 2014 8:52pm EDT  --  Report as abuse
MaskOfZero wrote:
Microsoft has little to gain in China.

As mentioned in the article, most Chinese steal MS Windows–including the government, and have pirated copies of XP.

The Chinese communist government is deeply suspicious of Windows software, fearing backdoors available to the NSA and other US intelligence organizations.

China will soon release their ‘own’ operating system (OS) which has been written from code pirated from various open source OS’s publicly available and from Windows code reverse engineered. Recently China prevented Windows 8 from being sold in China for security reasons, since Microsoft refuses to open up its source code, but also because it is not so easy to pirate as Windows XP.

Of course, if Microsoft did open up its source code, it would soon be competing with China Inc. selling a cheaper pirated version of their OS globally.

China is determined to have a made in China operating system and to block any foreign OS from their government and home computers–no matter what Microsoft does–short of opening up their OS.

However, in order to avoid running afoul of the WTO, they are using and abusing anti-trust legislation to provide the legal cover to block or impede foreign companies with a commanding technological lead in their respective industries.

Microsoft would probably be better off leaving China altogether given that the revenue there is tiny, and it is unlikely to ever improve in China, where intellectual property rights are non-existent, and pirating is actively supported by a government.

Aug 27, 2014 10:26pm EDT  --  Report as abuse
Lodmot wrote:
So let me get this straight…
According to China it’s totally fine for them to break anti-piracy laws that we have set, but if we break one of THEIR laws, it’s bad?

I say Microsoft should pull out of there and let them make their own OS. Otherwise, come to an agreement where China won’t pirate the software as long as Windows 9 is better. =w=

Aug 28, 2014 8:44am EDT  --  Report as abuse
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