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China regulator says Microsoft should not obstruct anti-trust probe

BEIJING (Reuters) - Microsoft Corp should not obstruct an anti-trust investigation by Chinese regulators, the State Administration for Industry and Commerce (SAIC) said on Monday, the latest shot fired by China's government at the U.S. software giant.

The SAIC has questioned Microsoft's lawyer, Deputy General Counsel Mary Snapp, who was at the regulator's offices on Monday, a spokesman for the SAIC said.

Last week, the SAIC said it was formally investigating Microsoft for breach of anti-trust rules and had raided four of the software firm's offices in China.

"Microsoft promised to respect Chinese law and fully cooperate with the SAIC's investigation work," the SAIC said in an e-mailed statement. Microsoft declined to provide immediate comment, but last week said its "business practices are designed to be compliant with Chinese law."

The warning is likely a preemptive step in the course of the government's investigation.

"I don't think the government is saying Microsoft has already done anything to obstruct the investigation, otherwise they would have publicized it," said You Yunting, a senior partner at Shanghai DeBund Law Offices. "In China, you do everything you have to to completely submit if the authorities investigate you. The government is saying, 'We might be more lenient if you don't resist, otherwise we'll be tough'."

Microsoft has been suspected of violating China's anti-monopoly law since June last year in relation to problems with compatibility, bundling and document authentication, the SAIC said last week.

But industry experts have questioned how exactly Microsoft is violating anti-trust regulations in China, where the size of its business is negligible.

The U.S. company has taken a public beating in China in recent months. It has been subject to wider scrutiny against U.S. technology firms in China in the wake of former U.S. National Security Agency contractor Edward Snowden's cyber espionage revelations.

It has also seen service for its OneDrive cloud storage service disrupted in China, and had its latest Windows 8 operating system banned from being installed on the central government's new computers.

(Reporting by Paul Carsten, Gerry Shih and Beijing Newsroom; Editing by Miral Fahmy and Ian Geoghegan)

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