The surprise raid by Japanese antimonopoly authorities on Microsoft Corp.’s Tokyo offices was impeccably timed — barely a month before the European Union slapped a $613 million fine on the company.
The message from the Fair Trade Commission was clear: Japan is not about to sit on its hands while other global powers raise concerns over Microsoft’s suspected abuse of its domination of the computer software business.
But whether the Japanese investigation that triggered the commission’s inspections of the software titan’s Tokyo offices will amount to much more than symbolic posturing remains unclear, experts say.
“The Japanese Fair Trade Commission wants to demonstrate it’s marching in lockstep with the other nations,” said Tadaaki Mataga, a Gartner analyst who thinks that anything more than a warning is unlikely.
The commission said a possibly restrictive clause in Microsoft contracts with hardware companies here was behind the raid. The language essentially barred Japanese companies that license Windows operating systems from taking any legal action against Microsoft over patent violations, according to commission officials.
Microsoft has denied any wrongdoing. Yet shortly after the commission’s Feb. 26 raid, the company said it had decided the previous week to delete the clause in future contracts — and had already told the manufacturers.
A Japanese government official, speaking on condition of anonymity, said the raid should be seen a pressure tactic.
The patent issue is especially critical for Japanese electronics makers as they develop smarter cell phones, network gadgets, digital appliances and other products that are supplanting desktop PCs as computing platforms, the official said.
There is concern that Microsoft, if allowed unfettered access to proprietary information about these firms’ products, would be able to use this information to its own advantage and to the other firms’ detriment.
It is feared that Microsoft could gain even more muscle globally as broadband Internet boosts the trade in music, video and other digital content.
Beyond the fine it imposed, the EU ordered that Microsoft provide European computer manufacturers with a version of Windows stripped of the company’s digital media player — and ordered it to share more information with rivals in the server market.
The monopoly watchdog in Japan rarely resorts to fines; a fine of the magnitude of the one imposed by the EU would be unthinkable here.
The raid, nevertheless, was major news in Japan.
The government official consulted about the fair trade raid said Japan wants to see what Microsoft will do next — monitoring how thoroughly it will remove the contested clause — before it considers further action.
Toshiba Corp., Matsushita Electric Industrial Co., which makes Panasonic-brand goods, Sharp Corp. and other Japanese electronics makers refused to comment on the Microsoft probe, saying they were also being questioned by the commission about it.
As in the rest of the world, Windows controls virtually the entire PC software market here. Manufacturers are thus extremely nervous about saying anything that may damage their relations with Microsoft — even as they wish to keep its prowess in check.
Microsoft Japan said that the investigation by the commission was continuing through meetings and requests for information, adding that Microsoft was cooperating with the probe.
Having modernized in the decades after World War II largely through government-orchestrated scenarios favoring major companies over the little players, Japan has never boasted a corporate culture that demands transparency or slams monopolistic behavior.
But Tokyo has lately grown somewhat wary of Microsoft’s might, trying to push for open-source software such as Linux not only in government but also in private-sector research and product development. Many of Japan’s latest gadgets and robots use Linux, not Windows.
The trade ministry has been promoting not only the use of Linux here, but also collaboration with the governments of South Korea and China to share research findings. It has also encouraged exchange among experts, an effort that is seen as going hand in hand with antimonopoly pressure on Microsoft.
“Japanese makers are grateful that the powers above are acting,” to keep Microsoft’s might in check, says Kazuya Yamamoto, analyst at UFJ Tsubasa Securities Co. in Tokyo. “It’s an expression of national policy that’s beyond the reach of individual companies.”
And the chances are not great for Microsoft to repeat in the realm of network gadgets what it has achieved in the world of personal computers, as Japanese makers decisively turn to Linux, Tron and other less expensive operating systems for their latest products, Yamamoto said.
Robots and cell phones are among the new Japanese gadgets that already run on Linux and Tron, while more products are in the pipeline.
“Behind the commission’s investigation is the agenda from the Japanese makers determined not to have their hands tied when they try to develop network consumer gadgets,” the Nihon Keizai Shimbun said in an editorial following the EU ruling.
“If we hope to make various technologies work successfully together, it’s precisely Microsoft that must be more open with its own technologies.”