Microsoft has joined forces with a handful of local partners in an attempt to hang onto its market share in an increasingly protectionist Chinese tech economy. The partnerships feature several politically connected companies, as well as a state owned Chinese military technology consortium.
Microsoft’s partnership with state-backed China Electronics Technology Group Corp. could lead to the deployment of a ‘localized’ version of Windows 10, which is their primary project together.
China’s government has invested heavily in several homegrown operating systems in an attempt to remove foreign technology from banks and government institutions. They have worked on at least four different China-optimised, Linux-based operating systems, including Ubuntu Kylin, which is reportedly used on 40 percent of Dell computers in China.
The latest partnership with Microsoft could mean the government is open to keeping foreign operating systems within their most important state infrastructure, so long as they are modified. Earlier this year the government put out a notice to banks requiring them to remove components of foreign technology from the banking system by 2020, the plan was later put on the back-burner.
Microsoft has also revealed this week that they have struck a partnership with Baidu, meaning the Chinese search engine will feature as the primary search engine on Microsoft’s Edge browser in China. In return, Baidu will make is simpler for users to upgrade to Microsoft’s new software.
Microsoft’s China cloud partner 21Vianet Group has also organised a joint venture with state-backed chip-maker Tsinghua Unigroup, which will hep the company sell cloud services to state-owned enterprises.
The handful of high-profile partnerships are the latest in a line of China commitments put forward by U.S. tech companies seeking to hold on to an increasingly local market. With the complex geopolitical conditions and restrictions, partnerships are a way for foreign tech companies to stay vital in a market that has openly threatened to rid its main industries of foreign tech.
This week Cisco announced a partnership with local computer company Inspur Group, hoping to gain back some of the market lost in the wake of their implication in the 2013 NSA revelations. Other U.S. tech giants have also made multi-million, or multi-billion, dollar commitments to China over the past 8 weeks.
The commitments also come as Xi Jinping met with U.S. and Chinese tech leaders in Seattle this week, committing to reducing security risks.