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Microsoft looks to poor nations Donations of software and training serve dual purpose

Posted on: Friday, 13 June 2003, 06:00 CDT

Microsoft Corp. plans to announce this year a program to donate software and training to schools in the world's poorest countries, company executives said Thursday. The program is part of a wider push into developing markets, Jean-Philippe Courtois, the head of Microsoft operations in Europe, the Middle East and Africa, said in an interview. Courtois said full details of the program, including the amount of free or discounted software and training involved, would not be announced until late summer or early autumn. But the program, he said, would be roughly similar to Microsoft's efforts in South Africa, where the company is donating software and training teachers in 11,000 schools. The company has for many years given away its Windows operating system software in conjunction with specific projects in poor countries, but executives said the new program would be the first sustained worldwide effort. This is just not some initiative of the day or year, said Peter Hayes, vice president for government sales at Microsoft's European headquarters. This is a long, long-term, multiyear effort.

News of the plan was greeted with skepticism by Microsoft's competitors, who in the past have accused the software giant of using charity as a cover for retaining its dominant market share. About 90 percent of the world's desktop computers run on Microsoft Windows. I don't think this has anything to do with generosity, said Thomas Vinje, a partner in the Brussels office of Morrison & Foerster, which represents an association of Microsoft competitors such as Sun Microsystems Corp., AOL Time Warner Inc. and Oracle Corp. If you use your $46 billion cash hoard, Vinje said, and your long-run objective is to expand your monopolies in those countries and obtain monopoly rents in those countries, there are questions about fairness.' Courtois said the program's goals and intentions were a mix of corporate generosity and self-interest. It's not philanthropy, he said. Nor is it short-term aggressive tactics, he added. Courtois said the program would help Microsoft position itself in developing markets. Some of the biggest financing efforts that we are doing, that we'll be doing as a company for the next couple of years, will be directed toward developing countries, he said. The program will mainly focus on free training in setting up government and educational computer systems. Hayes said the program would work like the company's business investment funds, which Microsoft uses to provide free consulting to large companies in an effort to get them to buy the company's products and secure large deals. He said that by providing free training to governments and educational institutions, Microsoft would be doing more than just saying, Here's the software, gotta go!

People are maybe thinking there's something else behind it, Hayes said. But he added: It's not all about just trying to go for the money. The company's goal, he said, was to help build local economies. Vinje, the lawyer for Microsoft's competitors, questioned whether the program was in the long-term interest of poorer countries. I'm certainly not against poor countries being treated well, Vinje said. On the other hand, it's not necessarily in the long-term interest of poor countries to become more and more in the grips of Microsoft.

Microsoft's new program follows news of a separate, secretive fund established by the company last year in order to capture education and government contracts, mainly in developing nations. Existence of the fund, known as the Education and Government Incentive Program, was revealed last month in the International Herald Tribune. It allows Microsoft managers to discount deals or offer software free in case of heavy competition. The program specifically targeted Linux, a small but emerging rival. Courtois said that the internal memo laying out details of this fund had been sent to the European Commission, which is investigating the company for abuse of its dominant position. We are competing in a fair way, Courtois said in the interview. We are such a visible company, in particular with dealing with governments, we obviously are very careful because we know that we are scrutinized more than any other company on the planet in the software industry.

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