In the news: Government use of Windows 8 banned, Baidu invests in Silicon Valley and CSRC plans 100 IPOs

Government banned from Windows 8 over security

China has banned government use of Microsoft's latest operating system, Windows 8. The company has long struggled with China sales. In 2011 former CEO Steve Ballmer claimed that, due to piracy, the company earned less revenue in China than in the Netherlands, even though computer sales matched those of the US. China's Central Government Procurement Centre did not provide any reasons for the ban but posted on its site that it issued the ban of installing Windows 8 on government computers as part of a notice on the use of energy-saving products. However, Xinhua stated reasons are to ensure computer security after Microsoft ended support last month for its 13-year-old Windows XP operating system, which was widely used in China. Microsoft has announced it has been working proactively with the Centre and other government agencies through the evaluation process to ensure its products and services meet all government procurement requirements.

Sources:
Reuters
South China Morning Post

The move triggers speculation that the government is shutting out foreign computer systems over data security concerns. Data security is a huge issue for countries like China, especially in the midst of allegations that the US National Intelligence Agency had been tampering with computer parts being shipped to other countries and the US indicting five PLA officials on spying charges. The two countries have blamed each other for state-backed cyber-attacks for years. Chinese social media regularly blows up with comments regarding national security controversies, from Snowden to corruption leaks. An official report stated that all operating systems and devices used in China are from abroad, which has imposed a great threat to internet security. China's decision to ban Windows 8 from public procurement prevents Microsoft's push of the OS to replace XP, which makes up 50% of China's desktop market, analysts said. Other experts have said the end of Microsoft's XP support creates a rare opportunity for home-grown operating systems.

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Baidu opens US$300 million Silicon Valley R&D centre

Baidu will invest US$300 million in a new R&D centre in Silicon Valley equipped with 200 employees and led by Andrew Ng, who was most recently the head of Stanford University's artificial intelligence lab and also helped Google set up its artificial intelligence efforts. Ng has said the new Baidu lab would give him more resources for specific projects. The move shows the rapidly-rising ambition and influence of China's largest internet companies – some have even grown to be among the largest in the world, benefitting from the Chinese government's blocks on foreign services such as Facebook and Twitter. Baidu's key rivals Alibaba and Tencent both have offices near Silicon Valley that have acquired and invested in local start-ups. Chinese smartphone start-up Xiaomi lured executive Hugo Barra away from Google Android's mobile software arm last year. Earlier this year, Google bought DeepMind Technologies for over US$500 million.

Source:
The Wall Street Journal

The new R&D centre will focus on the development of artificial intelligence and deep learning, a branch of artificial intelligence in which computer scientists attempt to simulate the human brain through computers that can see and learn for themselves. The field has drawn investment from Google, Facebook and Microsoft, and while Baidu already has a deep learning centre in Beijing, it is advancing its technology to refine its site ad-targeting and speech recognition software and is also working on technology to predict tourist turnout at hotspots in China based on factors such as weather and date. Baidu also unveiled an app last year that identifies objects in smartphone photos. While Baidu doesn't compete with Facebook and Google for users (since both are blocked in China – even Microsoft faces similar problems now), the three are in a race for talent and innovation. The flow of Chinese tech companies into VC hub Silicon Valley will only increase, and in this field, the race is endless.

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CSRC to allow 100 IPOs this year

The China Securities Regulatory Commission plans to have about 100 public offerings from June to the end of the year – though this is less than analyst estimates of 350 to 400 – as the government eases worries over a flood of new shares' weighing down on the stock market. The CSRC Chairman Xiao Gang has stated to ensure the share sales will be spread over time with a similar number each month, which gives time for investors to speculate and prepare accordingly.

Source:
Bloomberg

Policymakers are seeking to improve IPO quality as part of broader financial reforms aimed at attracting investors. The State Council announced on May 9 that it would deepen reforms in order to improve the country's securities and capital markets. The stock exchanges of Hong Kong and Shanghai were connected last month to promote trading volumes and renminbi use. Also, the CSRC plans to further increase the total quota under the QFII scheme, which allows foreign buyers to invest in Rmb-dominated A shares. How will China's volatile capital markets fare with all the IPOs, and are the laws solid enough to handle them?

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