Yesterday (July 28) afternoon, an insider from Microsoft China confirmed to reporters that personnel from the State Administration for Industry and Commerce (SAIC) made a surprise visit to Microsoft's offices in Beijing, Shanghai, Guangzhou, and Chengdu, and are conducting inquiries on certain matters.

In a text message statement sent to reporters, the person said, "We are committed to creating products that meet customers' requirements for functionality, security, and reliability. We will actively cooperate with the government's investigation and answer relevant questions."

However, the person did not disclose the reason for the investigation. Industry speculation is widespread that the SAIC may be launching a formal investigation into Microsoft's monopoly in the operating system market. IT industry analyst Sun Yongjie, in an interview with reporters, said that if Microsoft is suspected of monopoly, it could only be in the operating system field. But currently, PC operating systems are no longer the focus of the industry, and it cannot be ruled out that Microsoft is being investigated for issues related to information security or business practices.

Microsoft may be suspected of monopoly

On July 2 this year, Microsoft was already investigated by the Beijing Energy Conservation Supervision Team for excessive carbon emissions. This time, being investigated by the SAIC, although the reason is unknown, it can be seen from the department's responsibilities that it may be related to monopoly.

Reporters learned that in August 2008, 22 days after the implementation of the Anti-Monopoly Law, the Ministry of Commerce issued a "Three Determinations" plan that defined the institution, staffing, and functions, and established the Anti-Monopoly Bureau. The pattern of China's anti-monopoly enforcement by three departments—the National Development and Reform Commission, the Ministry of Commerce, and the SAIC—was formed.

In terms of division of labor, the SAIC's Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau is responsible for specific anti-monopoly enforcement of monopoly agreements other than price monopoly behavior, abuse of dominant market position, and abuse of administrative power to eliminate or restrict competition.

Previously, in the domestic market, companies including Kingsoft, Red Flag Software, and Yongzhong had accused Microsoft of monopoly. A legal expert who declined to be named said that the SAIC had previously interviewed relevant companies and individuals multiple times to prepare for an anti-monopoly investigation against Microsoft. With the growing call to "de-IOE," it is very likely that formal investigation procedures have been initiated.

In 2004, the SAIC issued a report stating that several multinational companies, including Microsoft and Eastman Kodak, had already occupied advantageous positions in relevant fields of the Chinese market, and these companies often used this advantage to hinder or restrict market competition.

Among them, Microsoft's operating system software occupied 95% of the Chinese market, forming a de facto monopoly. Senior internet observer Fang Xingdong, in an interview with a reporter from the Daily Economic News, said that against the backdrop of the gradual development of global informatization, the anti-monopoly risks faced by foreign companies including IBM, Qualcomm, and Microsoft are rising. Especially in some third-world countries, security awareness is gradually increasing, and promoting localization to ensure information security is an important issue.

Domestic systems still "cannot be supported"

Since the beginning of this year, Microsoft's development in China has encountered continuous troubles. On May 16, the Central Government Procurement Center issued a notice stipulating that in the "Information Technology Agreement Supply Mandatory Energy-Saving Product Procurement Bidding," all computer products are not allowed to install the Windows 8 operating system. However, Windows 7 still appears on the government procurement list.

The notice caused a stir in the industry. Fang Xingdong said that more than 90% of computers worldwide use Microsoft operating systems, and in China, this proportion exceeds 95%. Apple's Mac OS X operating system, based on Unix, can only be considered a niche market.

However, Microsoft has never officially published its performance data in China. There have been reports that nearly 80% of Microsoft's revenue in China comes from fines in the process of combating piracy, rather than from sales of genuine software.

Although this data has not been officially confirmed, combating piracy has indeed been a key means for Microsoft to promote product breakthroughs and obtain "compensatory benefits" in China for a period of time.

Former Microsoft CEO Ballmer said in 2011 that Microsoft's revenue in China, with a population of 1.3 billion, was actually lower than in the Dutch market, and "Microsoft's revenue per computer sold in China is about one-sixth of that in India."

Analysts believe that if the SAIC's investigation into Microsoft this time is established, it will not have a major impact on its performance in the short term, but it will bring opportunities to domestic operating systems.

In the recently announced list of suppliers for the 2014 Central Government Procurement Agreement, in terms of operating systems, in addition to Microsoft's Windows system, the proportion of domestic operating systems has increased significantly.

Reporters saw on the Central Government Procurement website that in the list of personal operating systems this time, there are 8 companies including Deepin, SPGnux, NeoKylin, Zhongke Fangde, YouKylin, Microsoft, Alibaba Cloud, and Longxin. Among them, the Alibaba Cloud system is a mobile operating system that adopts a free strategy, with a bid price of 0 yuan.

Fang Xingdong believes that for a new operating system to gain a foothold, it first needs an ecosystem with rich industrial forms to support it, and this market must be strong enough. "If China wants to create a truly competitive operating system, it must be based on model innovation and mechanism innovation, because Microsoft's ecosystem and advantages cannot be replicated."

In Sun Yongjie's view, even if the anti-monopoly investigation against Microsoft is established, the domestic operating system market is not optimistic. "The architecture of an operating system must start from the bottom layer. Most Chinese companies are still unaware of this and only see the surface phenomena."

Sun Yongjie said, "Over the past many years, it is precisely because of the defects and deficiencies of domestic products that Microsoft's monopoly has objectively been caused.