Microsoft Faces Taiwan Antitrust Investigation

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Taiwan's Fair Trade Commission has launched an investigation into whether or not Microsoft holds a monopoly position over the island's software market and if it abuses such a position, an official said Monday.

The government investigation into Microsoft will also look into complaints Microsoft is limiting consumer choices by restricting the availability of Windows XP on new PCs and whether or not pricing of Microsoft products is fair to consumers on the island.

Taiwan's investigation is unique in that no other country where Microsoft has traditionally faced regulatory issues, including the U.S., Europe and South Korea, is currently looking at the company for the same reason.

"Taiwan doesn't have its own (OS) software," said an official from the Fair Trade Commission. "Most people in Taiwan use Microsoft software and depend on it for work. Their market share should be very high," she said.

Should the world's largest software maker be found to have broken Taiwanese antitrust laws, the company could face a fine of up to NT$25 million (US$797,361) as well as be forced to change some of its business practices on the island.

"We fully intend to comply with the process and make sure they get all the information they need," said Matt Pilla, Microsoft's director of public relations in Asia.

Taiwan's investigation was launched in part due to urging by Taiwan's non-profit Consumers' Foundation.

The group last month called on Microsoft to continue selling Windows XP as an option on all new PCs, saying that discontinuing sales of the OS would violate Taiwanese antitrust laws. The Consumers' Foundation alleges that Microsoft is using its market position to try to force people in Taiwan to switch to Windows Vista.

The foundation conducted a survey on the island that found 67 percent of consumers are opposed to Microsoft's decision to stop selling XP at the end of June.

The main complaint is against a lack of choice when people buy new computers. Around 56 percent of survey respondents who had bought a new computer recently were told they could not buy Windows XP and instead were forced to purchase Vista, the foundation said.

The foundation said Microsoft controls 98 percent of Taiwan's OS market share, with 75 percent of survey respondents using Windows XP on their PCs and 23 percent using Vista.

A majority of respondents to the survey, over 53 percent, said they did not think Vista is as useful as XP, while 23 percent said Vista is the better OS.

Pilla pointed out that Microsoft has extended XP's life beyond traditional norms for the company, including allowing it to be sold on certain systems meant for businesses until June 30, 2009 and on ultra-low cost PCs through June 30, 2010.

Extending the life of an older product isn't easy, he said. By extending the dates of usage, Microsoft also has to extend the time it will support Windows XP, which now stands at April 2014.

Long after it will cease being sold, the product will still have to be updated with new hardware drivers and other software support.

In addition, most of Microsoft's software developers are already working on Vista, so the company has to reallocate resources to continue working on XP.

Taiwan's Fair Trade Commission investigation is at least the third action taken against Microsoft in recent years.

In 2004, the commission worked with Microsoft to resolve disputes around Windows Media Player after a ruling by the E.U. found Microsoft guilty of trying to destroy competition in that market. A year earlier, the commission reached a settlement with Microsoft over the bundling of Office software.

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