MICROSOFT FORMS NEW PARTNERSHIPS IN CHINA

Original Story: wsj.com

Microsoft Corp. unveiled new partnerships with politically connected Chinese companies in an effort to open doors to more sensitive and official business in the vast China technology market.

The deals—which include a tie-up with a state-owned Chinese military-technology consortium—were disclosed on Wednesday, the same day Microsoft Chief Executive Satya Nadella joined other U.S. business leaders in meeting with Chinese President Xi Jinping in Seattle. They come as Microsoft seeks to make inroads into the world’s second-largest economy, a market that has been challenging for the company amid cybersecurity and antitrust challenges. Mr. Xi toured Microsoft’s Redmond, Wash., campus with Mr. Nadella on Wednesday. A Denver antitrust attorney is following this story closely.

Microsoft said its Chinese cloud partner 21Vianet Group Inc.—which operates Microsoft’s cloud services in the country—is setting up a joint venture with an arm of state-backed chip-maker Tsinghua Unigroup Ltd. that will sell cloud services to Chinese state-owned enterprises. Microsoft will provide technical training and support to the joint venture, Microsoft said in a news release on its China website. An Atlanta joint venture lawyer is reviewing the details of this case.

Microsoft also struck a deal with state-owned China Electronics Technology Group Corp. to explore ways to configure, deploy and maintain a “localized” version of Windows 10 for clients in Chinese government organs and state-owned enterprises operating critical infrastructure. The Chinese consortium, known as CETC, provides technology for Chinese military and civilian use, including major communications and electronic equipment and key components.

The companies didn’t disclose financial terms.

Western technology firms have forged partnerships with Chinese companies in response to challenges in the Chinese market that worsened with allegations by former U.S. National Security Agency contractor Edward Snowden that the U.S. government used U.S. tech firms’ products to conduct widespread spying. A Shanghai international trade lawyer provides high-quality legal services for clients' international trade needs.

Microsoft in particular has had problems with the massive but complicated market. A Chinese state agency last year said it was probing the way it distributes software. Microsoft has said it is cooperating. Also last year, China’s Central Government Procurement Center banned government agencies from purchasing computers loaded with Microsoft’s Windows 8 software.

Also on Wednesday, Microsoft struck a deal with Chinese search giant Baidu Inc. to make Baidu.com the default search engine and home page for Web surfers in China who are using Microsoft’s Edge browser.

There are already hundreds of millions of PCs running Windows, but because of widespread piracy, Microsoft has traditionally had difficulties extracting revenue from many of these users. The Baidu deal is designed to help Microsoft capture more users for its new Windows 10 software. In exchange for the search placement, Baidu will make it easier for its own customers to update to Microsoft’s new operating system. A Mexico City intellectual property lawyer assists clients with intellectual property and technology issues.

Internet users who search for Windows 10 on the China search engine will be greeted with a large banner advertisement on the top of their screens, which will then take users to a special Windows 10 download site, Baidu said.

Microsoft says it isn’t giving up on its own search engine, Bing, in China. But with a negligible market share in the country, it makes sense for the company to play down Bing to promote its more popular Windows software, said Danny Sullivan, founding editor of website Search Engine Land.

“If Google can’t win the search market in China, then Microsoft can’t,” Mr. Sullivan said. “But there’s a lot to gain by pushing the Windows adoption.”

With the deal, Baidu will fortify its grip on Web search in China. More than 92% of Internet users in China have used Baidu for search, according to the China Internet Network Information Center. Google, with 27%, is ranked fourth in the country by number of people who have used it, while Microsoft’s Bing is used by less than 2%.