China's State Intellectual Property Office has denied a flurry of media reports suggesting the government agency was investigating Microsoft for discriminatory software pricing. In a statement briefly posted at its official Web site, according to media sources, the SIPO noted that it has never undertaken any market-monopoly investigations before, and has no plans to do so because its mandate from Chinese government agencies is "to investigate and research domestic piracy issues."
The statement was intended to contradict a report by Shanghai Security News in which an unnamed source had suggested to the Chinese financial newspaper that Microsoft would be vulnerable to a lawsuit following the debut of China's forthcoming anti-monopoly law, which becomes effective Aug. 1. Microsoft quickly responded by telling western media outlets it was unaware of any antitrust investigation by Chinese authorities.
The Shanghai Security News article was given coverage by the worldwide media, which deemed the news to be credible because SSN is wholly owned by the Xinhua News Agency -- the official voice of the People's Republic of China. SSN also promotes itself by saying it serves as "the China Securities Regulatory Commission's government-designated channel for disclosure for Chinese-listed companies."
According to a joint study conducted by the Business Software Alliance and IDC, 82 percent of all PC software in China was pirated in 2007 -- down from 92 percent in 2003. Under such circumstances, a Chinese investigation of Microsoft would have been most ironic, given that the software giant has suffered huge losses from lax anti-piracy regulations in China over the past five years.
Microsoft has been making a huge public-relations effort to rehabilitate its reputation as a monopoly. The software giant issued an interim status report this month that sought to show it is making progress in resolving U.S. antitrust issues raised by 17 states and the District of Columbia. Microsoft also announced that its forthcoming Office 2007 Service Pack 2 will include support for the OpenDocument Format (ODF) standard -- the open-source rival to the software giant's Open Office XML (OOXML) document-saving format.
However, Microsoft is not out of the antitrust woods yet. The European Commission is currently investigating whether the software giant's announced support of ODF in its next update to Office 2007 will allow consumers to process and exchange their documents with the software product of their choice.
"When a market develops in such a way that a particular proprietary technology becomes a de facto standard," explained European Competition Commissioner Neelie Kroes, "then a competition authority or a regulator may need to intervene. In addition, where equivalent open standards exist, we could also consider requiring the dominant company to support those, too."
The final approval of Microsoft's OOXML document standard by the International Standards Organization has been delayed due to official complaints filed by Brazil, India, South Africa and Venezuela. Kroes appeared to be sympathetic to their objections about the standards-approval process.
"Standards bodies do important work in difficult circumstances," but their "rules need to keep pace with the changing commercial environment," Kroes said. "If they need help in tightening up their rules to avoid being manipulated by narrow commercial interests, or to design the right ex ante rules, then they have my support."