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Microsoft Offices in China Subjected to Government Inspections

Chinese government investigators raided Microsoft offices throughout China this week in response to accusations of monopolistic practices and other, less-clear violations on Microsoft's part.

The Microsoft offices that were investigated included those in Beijing, Shanghai, Guangzhou and Chengdu, according to a report published Monday by The New York Times, citing a Microsoft spokesperson who declined to elaborate due to the sensitivity of the issue.

Approximately 100 investigators from China's State Administration for Industry and Commerce raided Microsoft's offices, reported The Wall Street Journal on Tuesday. The agency has vaguely accused Microsoft of not disclosing certain security features and how it integrates its various products, according to the WSJ. China's government, through state-controlled news outlet CCTV, has raised concerns about the security of Windows 8, for example.

Microsoft's business practices are designed to comply with Chinese law, a Microsoft spokesperson told the WSJ.

The investigations may have been a retaliation by the Chinese government following indictments by the U.S. government in May that charged five Chinese army officers with cyberattacks, according to the Times. Disclosures by Edward Snowden of the U.S. government's surveillance efforts have also escalated the Chinese government's concerns, several reports noted.

The raids followed a visit to China last week by Qualcomm CEO Steven Mollenkopf, according to the Times, which said he held talks with government officials and announced a $150 million "strategic venture fund" to invest in Chinese technology startup companies. However, it's unclear whether Mollenkopf's visit sparked the raids.

Like many U.S. corporations, Microsoft has identified China as one of its largest growth markets. It is not the only company in China's crosshairs; Chinese government officials have also started to explore the reliance of Chinese banks on IBM mainframes and servers, through IBM has agreed to sell its x86 xSeries server group to Lenovo for $2.3 billion.

Cisco and Google have also faced heightened scrutiny, according to reports, while Apple's iPhone has been deemed a danger to the country's national security.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.