China's Microsoft probe: Lies, hypocrisy, and strongarm tactics

China's impending suit against Microsoft for monopolistic practices is clearly a case of strongarm tactics, meant to force Microsoft to back off an any criticism of the Chinese government, and to help Chinese software companies get a leg up against Redmond. It's also hypocrisy of the highest order. A communist government complaining about a monopoly? Are we living in some kind of alternative universe?

First, the facts, or what we know of them. Computerworld reports that China's State Intellectual Property Office (SIPO) has begun an investigation of whether Microsoft has engaged in discriminatory monopolistic practices. The state-owned Shanghai Security News said that SIPO is looking at whether Microsoft is using its market power to overcharge for software.

New antimonopoly laws are going into effect in August, and SIPO may launch an antitrust lawsuit against Microsoft under those new laws.

It's laughably ironic that the world's biggest political monopoly -- the Chinese communist party -- is considering bringing a monopoly lawsuit against a private company. But they play business hardball in China, so it shouldn't be unexpected.

It's not that hard to figure out the Chinese motivation for the action. Microsoft and others have complained that copyright law is rarely enforced in China. Because copyright is rarely enforced, Microsoft has potentially lost a tremendous amount of revenue there. The Chinese government believe that having the country as a haven for copyright pirates is good business, and wants things to stay the way they are.

The potential lawsuit against Microsoft is a way to tell the company to back off on its criticism. The government hasn't even bothered to veil the threat. According to Reuters, a source told the Shanghai Security News:

It is not right for an international company to use its monopoly position to sell software at outrageous prices while criticising the Chinese people's awareness of copyright law.

China may also want to kick-start its own software industry, and one way to do that would be to prosecute Microsoft. In fact, there's some evidence that SIPO is in collusion with Chinese software firms. Reuters notes that Shanghai Security News reported:

China's State Intellectual Property Office was organising companies to bring lawsuits to challenge Microsoft's pricing and the dominance of its products on the Chinese market.

As with everything to do with China, it's hard to know exactly what the government is doing. It may want to help jump-start its software industry, or it may want Microsoft to stop publicizing China's as a haven for software piracy. But I wouldn't be surprised to see a deal made: Microsoft stops talking about software piracy in China, and China drops the suit.


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