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Microsoft Corporation (MSFT) Gives up on Chinese MSN Portal

Microsoft-Windows-10

Microsoft Corporation is going to close down its China portal next month. The firm insists it remains committed on growing its presence there. Microsoft provides a vast array of products and services in China such as cloud services and Windows 10. It also has its largest research and development center outside of the US located there. The company shut down its Chinese internet messaging service two years ago.

Microsoft-Windows-10

The MSN site in China provided lifestyle and news content and search function. It will be closed on June 7, about four weeks from now. This highlights how the Chinese market has proved difficult for Microsoft and other U.S. firms to penetrate.

Microsoft Entangled in Antitrust Probe Since 2014

Microsoft has faced a series of setbacks in China, where it has bet big. The company is currently fighting to extricate itself from an antitrust probe that has been ongoing since July 2014. The Redmont, Washington-based company was asked in January by Chinese regulator to give an explanation into major issues involved in the probe.

The China State Administration for Industry and Commerce Investigation asked Microsoft to shed light on various issues raised by the regulator. China launched its antitrust probe on Microsoft by raiding the latter’s offices in Shanghai, Chengdu, Beijing and Guangzhou.The probe covers sales, compatibility and other aspects touching on its Office and Windows software.

Microsoft’s search engine, Bing, also registered a poor showing in the world’s second-largest economy. Fierce competition from local rivals and the fact that “Bing” roughly means “sickness” in Chinese didn’t help matters further.

The software giant eventually scrapped off Bing for its Chinese customers of its Edge browser. It struck an agreement with local Internet behemoth Baidu to make its search engine the default one. Baidu.com also became the default home page for Chinese users of Edge browser.

The agreement with Baidu was part of Microsoft’s strategy to promote the use of Windows 10 in China. This would help combat the widespread use of pirated Windows software in China. On the other hand, Baidu saw the agreement as the easier way to help its users upgrade to Windows 10.

The partnership also provided an opportunity for Microsoft to delegate management of display advertising, a core aspect of MSN. Last June, the Windows software maker struck an agreement with Verizon Communications Inc.’s subsidiary, AOL, to manage its display ads business.

In December, Microsoft Corporation entered into a joint venture with local firm, China Electronics Technology Group, to distribute Windows 10 to Chinese civil service and government. In the fall, it also struck agreements with other Chinese companies such as Baidu, Xiaomi, UniGroup and Shanghai Media Group.

Other Foreign Technology Firms Have Had it Rough in China

Microsoft’s announcement to close down its MSN web portal in China brings to the fore the woes that foreign online content providers face in the Asian nation. Other Western technology companies that have been subjected to investigations in China include Apple Inc. and Qualcomm. Social media sites such as Alphabet Inc’s Google and Facebook Inc are blocked in China.

Recently, Apple saw its movie and digital book products and its partnership with Alibaba  and Disney to offer streaming video services suspended. The move was prompted by the Chinese regulators.

The suspensions came on the back of fresh rules that require a foreign company that wants to provide online content such as games, videos and books to seek government approval.

Google also wrestled with Chinese authorities in 2010, forcing it to massively scale down its Chinese business after cyber attackers targeted Gmail users. It had also disagreed with the local government on issues of censorship.

In 2015, chip manufacturer Qualcomm paid $975 million as settlement after it was accused by the government of violating new anti-monopoly laws.

Despite all this setbacks, Microsoft has no intention of pulling out of China. Instead, it has been engaged on an aggressive campaign to promote its cloud computing business across the nation. Microsoft has giant data centers in Shanghai and Beijing to provide clients with data storage and Internet-based on-demand computing services.

Elsewhere, Microsoft Corporation is yet to register the runaway success it had hoped for when it launched the Windows 10 free upgrade. While its user base overtook that of Windows 8, it still trails that of Windows 7 by a huge margin.

So far, 300 million active devices have installed Windows 10. The rate of adoption of this software is the fastest in Windows history. This means the software will be one of the most popular Microsoft products for many years to come.

Analysts are keenly monitoring sales of Windows 10 to see if it will remain consistent. The company has announced that it will phase out free Windows 10 upgrade on July 29. After that, it will cost you $119 to install a new version of the software. So if you are yet to install it, you better take advantage of the free offer now.

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