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China Has a History of Not Trusting Microsoft on Cybersecurity

by Adam Segal
July 30, 2014

A visitor walks past a Microsoft booth at a computer software expo in Beijing, June 2, 2010. Microsoft Corp appears to be the latest U.S. company targeted by China for anti-trust investigation after government officials paid sudden visits to the software firm's Chinese offices on July 28, 2014. Picture taken June 2, 2010. REUTERS/Stringer (CHINA - Tags: BUSINESS SCIENCE TECHNOLOGY POLITICS) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA A visitor walks past a Microsoft booth at a computer software expo in Beijing on June 2, 2010. (Stringer/Courtesy Reuters)

Reports of China investigating Microsoft for possible violations of anti-monopoly laws have tied the action to continuing tensions over cybersecurity. In response to the Department of Justice’s indictment of five alleged PLA hackers, as well as revelations in some of the documents released by Edward Snowden that appear to expose the NSA hacking into Chinese targets, Beijing has increased focus on the security of the products of Microsoft, Cisco, Oracle, Intel, and others. Newspaper articles have called these companies the guardian warriors, highlighted the alleged vulnerabilities that China’s reliance on these companies creates, and pushed for banks, government offices, and others to shift to Chinese competitors.

There seems little doubt that the Chinese are exploiting the Snowden revelations for commercial advantages. But it is good to remember that there is a history here. China has never been comfortable with being dependent on Microsoft products:

  • In 2003, to assuage security concerns, Microsoft shared part of the Windows source code with China and fifty-nine other countries.
  • In 2005, China’s National Development and Reform Commission announced that it would promote Linux products over Microsoft ones in order to promote local competitors and boost security.
  • In 2008, some local governments forced internet cafes to replace Windows with Red Flag Linux.
  • The same year, Microsoft’s Windows Genuine Advantage and Office Genuine Advantage, upon detecting a pirated version of Windows, temporarily blackened computer screens. This enraged many Chinese PC users and alarmed policymakers, who asked themselves what other controls over and access to Chinese computers Microsoft had.

For at least the last two decades, Beijing has searched for policy tools to reduce dependence on the United States and other developed economies for critical technologies and to create the conditions for indigenous innovationfor Chinese companies to move up the value chain from labor-intensive to high-technology products. And cybersecurity has also always been a priority and a worry.

In the past, because China still needed them, Beijing and the technology companies came to agreements that everybody could live with. The Chinese government squeezed, but the companies got continued access to the market and made large investments in R&D in China to show the government that they were collaborative partners. China still needs the tech companies, but that dependence, or at least Beijing’s view of that dependence, seems to be lessening. If that is the case, then the anti-monopoly investigations and the broader pressure on American companies are both part of a larger history and the start of something new.

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  • Posted by Df-41

    China can replace western technology companies:

    - Inspur and Sugon can replace IBM and Oracle in the high-end server market.

    - Huawei can replace Cisco in the enterprise (high-end routers and switches, LAN/cloud equipment) market.

    - Loongsoon can replace Intel in the PC CPU market.

    - Rockchip and HiSilicon can replace Qualcomm in the mobile and tablet CPU market.

    - Baidu can replace Google in the web search and web browser market.

    - Lenovo can replace HP and Dell in the PC market.

    - Kingsoft can replace Microsoft in the Office suite software market.

    - Qihoo 360 can replace Symantec in the anti-virus software market.

    - China Operating System can replace Google in the mobile operating system market.

    - NeoKylin can replace Microsoft in the PC operating system market.

    - YonYou and Kingdee can replace SAP and Oracle in the management software market.

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