By Eva Dou
China is investigating Microsoft Corp., the company said on
Monday, in the latest challenge in what has proved to be a
difficult market for the software giant.
In a statement on Monday, the Redmond, Wash., company said it
was working with officials. "We aim to build products that deliver
the features, security and reliability customers expect," Microsoft
said in a statement. "We will actively cooperate with the
government department's investigation and answer related
questions."
The statement didn't disclose additional information.
Two people familiar with the inquiry said Chinese corporate
regulatory officials made surprise visits to Microsoft's offices in
four Chinese cities.
It wasn't clear what the probe was focused on. The company
hasn't been accused of wrongdoing.
China's AIC acts as the nation's corporate registry and has some
marketing and antitrust responsibilities. It couldn't be reached
for comment late Monday.
AIC officials sometimes pay visits to industries under official
scrutiny that don't result in formal probes. Last year, when
Chinese government officials were probing the pharmaceutical
industry in the wake of bribery allegations against GlaxoSmithKline
PLC, AIC officials visited the offices of Roche Holding AG,
AstraZeneca PLC, Bayer AG and Sanofi SA. The companies haven't been
accused of wrongdoing.
State media named Microsoft among the companies that have faced
scrutiny from Beijing following allegations of cyberspying between
the U.S. and China. U.S. technology firms have suffered a chill in
China since former U.S. contractor Edward Snowden alleged last year
that the National Security Agency was spying on Chinese leaders and
that U.S. tech firms were providing data to the government.
Microsoft also faces longtime challenges. It has historically
struggled with rampant piracy of its software in China, resulting
in disappointing revenue. Although Microsoft has tried a range of
tactics to reduce piracy, it has met with limited success.
Microsoft doesn't disclose financial details of its business in
China, but the company's chief financial officer last week said the
company continues to "see challenging conditions in China" because
of a "weak business environment" experienced by other multinational
firms. Microsoft said it doesn't expect business conditions to
improve soon.
Microsoft had been in the Chinese government's cross hairs
before this week. China's powerful state-run television broadcaster
ran a report in June that questioned the security of its new
Windows 8 computer operating system. The broadcast quoted Chinese
experts who argued that Microsoft cooperated with the U.S.
government to carry out cyberspying.
A Microsoft spokesman had declined to comment on the broadcast,
but the company's general counsel, Brad Smith, had previously
described the steps Microsoft had taken to prevent government
snooping and protect customer data.
China's Central Government Procurement Center said in May that
the government couldn't purchase computers loaded with Windows 8.
Microsoft decided this year to pull the plug on support for its
aging but widely installed Windows XP software.
The government ban came shortly after the U.S. charged five
Chinese military officers with spying by hacking into U.S. computer
systems.
Other U.S. companies have also been under scrutiny in the
country. China's state broadcaster also raised questions about the
security of the iPhone in July, allegations that Apple Inc. has
denied.
Microsoft and other U.S. tech firms have worked to tamp down
public mistrust following the Snowden revelations. In June,
Microsoft publicly opposed a U.S. government search warrant for a
user's emails stored on company computers outside the country.
The software maker has also striven to build bridges with local
companies in China amid the security concerns. In June, Microsoft
struck a deal with Chinese security vendor Qihoo 360 Technology Co.
to cooperate on developing some technologies.
Microsoft will offer early advance sales of its Xbox One
consoles in China through Internet conglomerate Tencent Holdings
Ltd.'s chat services, Tencent's online retailing partner JD.com
Inc. said on Monday.
Yang Jie and Shira Ovide contributed to this article.
Write to Eva Dou at eva.dou@wsj.com
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