Chinese antitrust and Microsoft

As reported elsewhere and discussed by other ZDNet bloggers, a new antitrust law will come into effect in China on August 1st, and there is speculation that the Chinese government is using that law as basis for an investigation into the company. Not surprisingly, this brings a smile to the face of those with a habitual dislike of the "beast of Redmond.

As reported elsewhere and discussed by other ZDNet bloggers, a new antitrust law will come into effect in China on August 1st, and there is speculation that the Chinese government is using that law as basis for an investigation into the company. Not surprisingly, this brings a smile to the face of those with a habitual dislike of the "beast of Redmond."

Be careful what you wish for. China is a nation that has just started its journey towards integration into the global trade system, and its government already works fairly hard to tip the playing field towards its own companies. Antitrust, given its wide open nature, is one heck of a tool for mischief in the hands of governments whose real goal is to protect its "national champions."

Take this quote, grabbed from Richard Koman's blog:

“On the one hand, global software firms, taking advantage of their monopoly position, set unreasonably high prices for genuine software while on the other hand, they criticise Chinese for poor copyright awareness. This is abnormal.

By that standard, Hollywood should be shaking in its designer boots, as their wares are the most pirated in the world, and the prices they charge are, when converted into Yuan, quite high for the average Chinese person.

On the issue of prices (Richard says it costs over $1,000 in China for Windows plus Office), I'm assuming he is talking about the "off the shelf" price versus the OEM price. "Off-the-shelf," Windows plus Office costs about $1000 in the US (though few pay that, as most get both as part of new computer purchases, where costs are much lower). Microsoft's crime, it would seem, is to charge western prices in China, something they are changing somewhat, but is still very common around the world. One possible solution (and one I'm sure would spring to the minds of US politicians) is to allow the Yuan to float. If it were floated, the price of Microsoft software would reduce dramatically in China, because each Yuan would translate into more dollars.

It's worth remembering that antitrust is NOT covered by any global trade agreement. That means that governments are free to define antitrust however they please. Given that other protective tools are proscribed by such agreements, don't be surprised if antitrust becomes the next best thing.

To my mind, encouraging antitrust is a bit like encouraging an Alcoholics Anonymous attendee to go out for a few beers after work. Though I've nuanced my views on antitrust over the years (I see theoretical scope, a theory that is often widely missed in practice by ham-fisted bureaucrats), I still find it worrisome.

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