Birger Steen, CEO of Microsoft in Russia, is telling us about the lawsuit against a school headmaster from Perm' and tells the participants of our Club of the real state of affairs around this issue and Microsoft's attitude towards it. We also talk about the potential of Russian IT home market.
1. How did you manage to find the right decision in the lawsuit against the school teacher from Perm’?
When I say that Microsoft has a mission and an impact on society? It makes me proud to work for the company. I think, firstly, we were not party to the lawsuit, it was brought by the Russian prosecutor. Our only involvement with the case was that we testified as the experts that the software they have found was pirated. That was the end of our involvement with the case. We did try to settle it nevertheless, to me it is absolutely clear that we are not interested and we do not think that school directors or school teachers should be prosecuted for that kind of thing. We have a lot of licensing programs and digital access and IT access programs that would have made it possible for that school to acquire what they need from us for very small money.
2. What is the reason why there was so much negative publicity for Microsoft in this case?
I think that the way that case came out, the way it was presented to the public, as Microsoft pursues a school teacher. It was a great example of a PR situation which we should have managed much better as a company – but we did not manage this PR situation well. We did not come out with a real story in a proactive way, and as a consequence we came out as an aggressive company. And in that case there was no proactive effort from our side at all in this case.
3. How does this story fit into a wider contexts of the intellectual property rights protection in Russia?
Nevertheless, the interesting thing here is that is was a kind of bigger picture of the intellectual property rights, because the whole reason of the whole Ponosov affairs was that for many years we as a company had worked with the Russian authorities, Russian law enforcement and Russian law makers to improve the protection of the intellectual property so to make piracy less attractive. First and for most we should go after the pirates, not after the users. And this work became very successful to the extent that there had been cases like this one where the intellectual property, laws and the enforcement capability has been used in a context that we as a company probably not condone. And then you can ask yourself: “Should you be happy about Microsoft”. We are not happy when school suffers in this way. However, and this is perhaps important, the greater impact of the whole phenomenon is actually quite significant for us as a company in terms of our business growth here, but perhaps it is more important for the Russian software industry which had zero home market a few years ago and which has a significant home market today. So if you ask companies like Kaspersky or Abbyy, these companies have sales growth of several hundred per cent of the last few years because now there is a possibility for Russia software producers to sell in their own market. Unfortunately, there had been some places where this had taken the wrong form, but in the bigger picture this is the thing which is good not only for the Russian tax ministry, but also good for Russian IT, which we feel stronger about.
4. Do you think there are parents in Russia, which wouldn’t like the idea of their kids going to school with a piracy supporting headmaster?
I would and in this particular case it was a conscious choice. When we reviewed the case, we saw that he was warned, not by us, but by the local authorities, so he knew what would happen.
5. Where do you see the potential of the Russian software industry?
The potential for Russia to be a place where advanced software is made is tremendous. In fact, there is a bit of misunderstanding, because there aren’t many IT students in Russia, there are quite a few, there are some hundred thousand IT specialists, but compared with India or China, these numbers are small, if you count the number of heads. But the heads that we have are very good. If we count among the 50000 best programmers of the world, there will be quite a few Russians. So the Top-5%, Top-2%, Top-1% or the ones that get the Field’s medal – the highest form of recognition for the mathematician – one third of these medals in the last 30 years went to Russians. So if you look at the software which really changes things and has value, Russia could have a significant contribution. Today there are some good examples: Abbyy, Kaspersky, 1S, WSSoft, but compared with Israel, which is a much smaller country, they are actually few. Compared with any other country with a similar potential there are few. There should be twenty, thirty, forty, fifty household names that would build software in Russia.
6. How the growth of the Russian software industry fits with the long term strategy of Microsoft in Russia?
There was a part of our development plan that we have discussed a few times today – this long term development of our business in Russia. Part of it was developing of Russian eco system. Not for charity, because Russian software industry is good for us too. They would typically be using our operating systems and our programs that would be sold together with the Russian software. There is self-interest, but the impact of this would be that we would build up a basis where we as a company can also be part of in the longer term and really to build an industry here. And today we have in Russia one of the best programs for that worldwide, if you look inside Microsoft, from ‘Imagine Cup’, which is the competition for students where they get to test their programmer skills against the best students in the world, typically Russians win there in many categories, this year as well. Via grants for students who want to start businesses – free technical advice, free technical tools. Via support for small businesses which are just starting up together with the so-called Bortnik fund, and all the way up to support programs for bigger software producers. This was interesting from the decision of few people to go for the long term instead of the short term, we have managed to build something which today helps hundreds of Russian software companies. So good decisions bring good results.
