Microsoft Windows targeted in China's anti-trust probe

Chinese anti-trust investigators are targetting Microsoft Corp. and its practice of bundling its Windows operating system and Microsoft Office software.

Microsoft has not been fully transparent with information about its Windows and Office sales, Zhang Mao, the head of the State Administration for Industry and Commerce (SAIC), told reporters at a briefing in Beijing on Tuesday.

The anti-trust probe is part of aChina-wide investigation that has zeroed in on companies such as QualComm, Daimler AG and Chrysler.

• China's state media calls iPhones a danger to national security

But the focus on Windows, which is the dominant operating system in China as in the rest of the world, has raised questions about whether China is clearing the decks for its own made-in-China operating system, currently under development.

After Edward Snowden exposed the vulnerabilities of Western operating systems by releasing U.S. government files, China stepped up the pressure on its software and technology firms to develop a domestic alternative.

The new operating system, expected to launch in October, with support for mobile devices landing later, is based on Linux.

The SAIC has raided Microsoft offices in China and accused the company of being unwilling to work with investigators.

"The investigation is presently ongoing, and we will disclose the results to the public in a timely fashion," Zhang said, adding that the probe is one of nine opened this year which include the software, tobacco, telecommunications, insurance, tourism and utilities sectors.

The Chinese complaints, centred on problems with compatibility, bundling and document authentication for the Windows operating system, the media player and Microsoft Office software, echo anti-trust probes done in the EU and U.S. in the 1990s.

Microsoft settled in 2001 with the U.S. Department of Justice a long-running case centering around whether it could bundle its flagship Internet Explorer browser with Windows.

In 2004, the European Union ordered Microsoft to pay a 497 million euro ($656 million) fine and produce a version of Windows without the Windows Media Player bundled. That fine was later increased to nearly 1.4 billion euros.

Microsoft has declined to comment on the probe, Reuters reports.

But the widespread anti-trust investigations of foreign firms are throwing a chill over the foreign business community in China as companies are pressured to accept punishments and unable to get a full hearing into their case.

The European Chamber of Commerce has complained about the probes and analysts say the business environment, formerly friendly to investors, is deteriorating.