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November 2, 2006

Microsoft out of China? Yeah, right.

Posted by Kristi Heim at 11:01 AM

Clearly Chinese censorship is a thorn in the company's side, even to the point of raising the issue with visiting Chinese President Hu Jintao in Seattle, but suggesting that means a pull out from China makes no sense.

Comments by a Microsoft lawyer in a BBC article today created a flurry of speculation over the company's plans.

The article quoted Fred Tipson, senior policy counsel, as saying the repressive environment might force the company to reconsider its business in China.

"Things are getting bad ... and perhaps we have to look again at our presence there," he was quoted as saying. "We have to decide if the persecuting of bloggers reaches a point that it's unacceptable to do business there."

It seems more a matter of posturing. Reading between the lines, the warning seems designed to show critics that the company has some backbone and signal to U.S. policy makers that imposing some regulation on doing business in China might not be a bad thing.

The company is finally starting to make headway there on another huge thorn in its side: lack of intellectual property protection. This week Microsoft signed a deal to license IP (fifth item) developed by its researchers in Beijing to two Chinese companies.

Perhaps patience and pressure will pay off on the censorship issue, too.

Tipson said later: "The Internet is transforming the political culture of China. There is no question about it."

Update: Microsoft issued a statement today saying Tipson's remarks were misconstrued: "Microsoft will continue to offer services and communication tools in China. Contrary to an inaccurate press account of Microsoft comments at the Internet Governance Forum, we are not considering the suspension of our Internet services in China.

"On the contrary, we believe it is better for customers if Microsoft is present in global markets with these tools and services that can not only promote greater communication, but can also help foster economic opportunity and societal advancement."

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Tricia Duryee
Tricia Duryee
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Angel Gonzalez
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Kristi Heim
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