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Microsoft Attacks GNU/Linux in Asia Through the Government

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Summary: Diplomats parrots Microsoft claims and biased 'studies' about "shareware" like Linux and why it is bad

IN the previous post we showed more of what Microsoft was doing in Vietnam, by proxy. In the following Cablegate cable we receive confirmation of what we knew Microsoft was doing behind closed doors all around Asia, especially whenever a government made the decision to move to GNU/Linux (famously in Thailand)

We are highlighting bits of interest in the diplomatic cable (for those who are not aware, the Business Software Alliance is a Microsoft front group):




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Summary ------- 1. (U) With a software piracy rate estimated at 95 percent by the Business Software Alliance, there is no shortage of targets in Vietnam for IPR protection efforts. Microsoft executives tell ConGen that it will focus on getting the GVN and multi-national corporations to use licensed software. Microsoft is worried about the interest in Linux-based systems, fearing that because it is more difficult to use, offices that officially switch to Linux will soon unofficially switch back to pirated Microsoft software.

Target the Big Targets ---------------------- 2. (U) At a recent meeting with Econoff and Econ FSN, Microsoft\'s Director for Business Development Asia-Pacific Emerging Markets Mr. Faycal Bouchlaghem and Vietnam Country Director Mr. Ngo Phuc Cuong described the situation in Vietnam from their company\'s perspective. Despite the prevalence of vendors selling pirated copies of Windows and other MS software from countless shops, Microsoft has decided to focus first on getting the GVN and second on multinational firms operating in Vietnam to use licensed Microsoft software. Their target is to switch the GVN over completely to licensed product over the next five years. Microsoft told Econoff that, like the rest of the market, the GVN currently uses very little licensed software and that many multinational firms that are law abiding elsewhere start using pirated software after a few months in Vietnam.

Windows Costs Money ------------------- 3. (U) Microsoft describes two main difficulties in moving the GVN from pirated to licensed software. First is Microsoft\'s lack of pricing flexibility. MS claims that they are constrained from offering deeply discounted pricing for the Vietnam or any other market by a `Consent Decree\' agreement with U.S. Department of Justice. They say that the decree would allow MS to develop and sell a new Vietnamese Windows product, and if it was substantially different from the existing versions, they could sell this special version for any price they chose. Microsoft\'s representatives said that this was not viable, however, since the Vietnamese market would not offer enough of a return on the investment needed to develop such products. They said that the company can, however, discount software to existing customers. But these customers will still have to pay for it.

Linux is Cheaper -------------------- 4. (U) The promise (false according to MS) of cheap or even free Linux-based software is another issue. MS outlined several reasons why, in their admittedly biased view, Windows was a better choice. First, the average user is used to Windows-based point and click software and retraining them to another system will be difficult. Second, Linux systems require more technical expertise on the part of the end user than do Windows systems. Finally, there would be a massive compatibility problem -- most of the world uses Windows, and the GVN could find themselves in a position where it might be difficult to communicate and share data between their Linux systems and everyone else\'s MS systems, not to mention the relative shortage of third-party software that runs on anything other than Windows.

Copying Thailand ---------------- 5. (U) Microsoft claims that these factors will inevitably lead to one outcome. They contend, based on their own analysis using a post-purchase survey of commercial Linux users in Thailand, that within a few months of a shift to Linux, almost every GVN computer will also be running pirated Windows software. They claim using Linux will be a hassle no one will put up with for very long. In the Thai survey cited by MS over 70 percent of consumers that acquired Linux operating systems were back to using illegal Windows software within a few months.

Other Efforts ------------- 6. (U) Though the GVN and multinationals remain the focus, MS also works with the Economic Police by offering them training on how to detect pirated products in the retail market. Microsoft agreed to let Econ FSNs attend the next training session. This opportunity should allow ConGen to expand its contacts within the Economic Police and help us better target our assistance on IPR issues.

7. (SBU) The firm is still trying to figure out the best way to work with local law enforcement. Like many observers Microsoft has been critical of the GVN\'s effort to protect IPR and was surprised in a recent meeting when the Economic Police asked MS to \"identify targets\" for enforcement raids. Microsoft elected not to give any names. They explained that they do not want to set a precedent by doing the government\'s job when it does not take much detective work to find an IPR violator. Nor do they wish to have MS linked to police action in the minds of consumers. They do not want Vietnamese to think police raids and fines when they think Microsoft. Microsoft\'s country director told Econoff that a few high-profile raids against small shopkeepers would not/not help Microsoft\'s long term business plan in Vietnam.

8. (U) Though wary of the stick, MS has been trying to use the carrot to change behavior. The company\'s Vietnam offices recently began the \"Clean Shop Program.\" This program asks retailers of software and assemblers of PCs to sign a pledge to provide customers with only licensed software. In return, program members are rewarded with points for every licensed copy sold. Points can be redeemed for merchandise in a system not much different from a frequent flyer or shopper program. Thus far, the \"Clean Shop Program\" has had limited success. In an investigation of program members, MS found that over 30 percent of the shops and factories -- all of whom volunteered for the program -- were still distributing unlicensed software.

9. (SBU) Microsoft\'s efforts to influence the local IPR situation extend beyond enforcement and rewards programs. On March 16, 2004 the software manufacturer signed a Memorandum of Understanding (MOU) with the Information Technology Project Management Office (ITPMO) of the Ho Chi Minh City People\'s Committee. This MOU, five pages in length, was drafted to ensure, \"mutual business cooperation,\" and, \"establish a formal basis for cooperation in the area of Information and Communication Technology.\" Under the terms of the MOU, Microsoft will, \"contribute to the social and economic development of Ho Chi Minh City by developing the local IT ecosystem by building skills through IT training for ICT companies, students, teachers and government ICT professional employees based on common projects, so as to help create employment opportunities in HCMC.\" Microsoft also agrees to help develop HCMC\'s e-government projects and work with the city government to agree on software licensing terms under the Microsoft Volume Licensing Program. Finally, Microsoft will set up courses to teach educators and students about ICT, as well as seminars, \"as appropriate for the target audience,\" on the value of IPR protection and enforcement. In return, the HCMC People\'s Committee, through the ITPMO, agrees to \"co-operate with Microsoft in order to ensure that the Ho Chi Minh City People\'s Committee\'s government institutions lead by example in using only licensed software and adopt the best practices for IPR protection and for the enforcement of IPR protection through the relevant Government Institutions.\" (NOTE: Full text of MOU to follow by SEPTEL)

Comment -------

10. (SBU) While the MOU is certainly a positive development, in that it increases dialogue and highlights the importance foreign companies place on IPR matters, it is an agreement without teeth. The MOU does not give either side legal leverage, nor are the stated goals and responsibilities binding. Life can go on as usual. If either party finds that an obligation must go unfulfilled for reasons beyond their \"reasonable\" control, they are automatically relieved of the obligation as long as they inform the other signatory in writing. The MOU is a nice vision of the future, but it lacks an actionable plan.

11. (SBU) For now it appears that the world\'s software giant is more worried about competition from \"shareware\" than it is about pirates. Microsoft\'s arguments that Linux may not be a good fit for Vietnam clearly stem from self-interest, but they have a point. In a country where government offices are filled with computers running pirated software, it seems unlikely that a lasting improvement will take root if the new system is any more difficult to use than the familiar, albeit illegal, alternative. And it will be hard to take real enforcement actions in the South, when the government itself is one of the biggest violators. YAMAUCHI

Linux is actually not "shareware", it is Free/libre software.

This cable was labelled "IN VIETNAM, THE GOVERNMENT IS MICROSOFT'S FIRST TARGET" and it is easy to see why. There is also Linux FUD there, coming from the mouths of diplomats whose wages are paid by taxpayers. Who are those people really serving, people or corporations?

"It's easier for our software to compete with Linux when there's piracy than when there's not."

--Bill Gates


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