Govt told to drop deal with Microsoft

Ary Hermawan, The Jakarta Post, Jakarta

The Business Competition Supervisory Commission (KPPU) has urged the government to annul its recent deal with U.S. giant software producer Microsoft for the use of the latter's software in state offices and institutions.

The antimonopoly agency said Friday in Jakarta that if the government went ahead with the deal, it would violate the 1999 Monopolies Law.

"The commission believes that the Memorandum of Understanding with Microsoft is not the right way to end software piracy as it runs contrary to the principles of healthy business competition," the monopoly watchdog said in a statement Friday.

The MoU was signed in November last year by Information and Communication Minister Sofyan Djalil and Microsoft Southeast Asia director Chris Atkinson. In it, the government reportedly agreed to purchase 35,496 licensed copies of the Microsoft Windows operating system, and 117,480 copies of the Microsoft Office package for about Rp 377 billion (about US$41.9 million).

However, the MoU, which the government said was primarily aimed at eradicating the use of pirated software in government institutions, is not binding unless the two parties sign a formal agreement before March 31.

The KPPU said the MoU was "absurd" as it was based on the assumption that all desktops in government offices were using Microsoft software.

"It's certainly absurd as there are many computers, such as those in the State Ministry for Research and Technology, that have been using open-source software," said commission member Tresna P. Soemardi.

He said that the MoU could serve as a barrier to entry by software producers other than Microsoft, and impede the development of the domestic software industry.

"The MoU will also result in government institutions having no other option when purchasing software," he said, adding that the government would thus be handing a monopoly to Microsoft should the MoU be followed by a formal contract.

Free and open source software, such as Linux, Open Office, Ubuntu, and locally produced software Pinux, are now widely known and used in the public sector. The government itself recently launched the "Indonesia Goes Open Source" (IGOS) campaign.

Microsoft currently holds a 90 percent share of the country's operating-system and office-software markets. This figure, however, also reflects the number of personal computers using unlicensed Microsoft software in government offices.

Indonesia is one of the biggest centers of software piracy in the world, third only after Zimbabwe and Vietnam. This has badly affected the local software industry as a result of the availability of pirated Microsoft software.

The KPPU said the key to ending piracy was stricter law enforcement, and doubted that an agreement with Microsoft would put an end to the problem. "The MoU does not touch on the root of the problem, which is law enforcement," Tresna said.

Microsoft Indonesia president director Tony Chen has said that the deal was initiated by the Indonesian government as part of its effort to promote the information technology sector as a whole.

Promising a 70 percent discount on licensing prices, Tony said the MoU would result in savings of up to US$200 million for the government, compared to the $250 million it would cost if the government was to buy licenses at regular prices. The government would also save $60 million on free upgrades.

Meanwhile, Sofyan Djalil has argued that the MoU with Microsoft was necessary as the government needed to move quickly to develop the country's IT sector and public services, while the use of open source software was still subject to limitations.

Tresna said that both Microsoft and the ministry could face sanctions for breaching the Monopolies Law should the two press ahead with the multimillion dollar deal. "We will impose sanctions against any party which is found guilty of operating a business monopoly," he said.
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