3296 COHA Report, An Ailing e-Empire: Microsoft Blitzes Cuba and Latin America to Preserve Diminishing Financial Dominance

– Microsoft terminates Cuban access to its instant messaging service, which, at first glance, suggests an act of compliance at the behest of the U.S. government
– The software behemoth chides Latin American leaders for undemocratic principles in an online smear campaign which might be better aimed at itself

Cutting Off an Isolated Island
During the last week of May 2009, Microsoft abruptly and inexplicably banned access to its Windows Live Messenger instant messaging service in Cuba. In response to several inquiries, the company defended its action by asserting that “Microsoft has discontinued providing Instant Messenger services in certain countries subject to United States sanctions. Details of these sanctions are available from the United States Office of Foreign Assets Control (OFAC).” In other words, the company claimed to be complying with the provisions of the Cuban Assets Control Regulations (CACR), the federal statute first issued on July 6, 1963 which had the responsibility for regulating the now-anachronistic trade embargo with the Caribbean island. Specifically, Microsoft was referring to the section of the CACR delineating that “no foreign subsidiary or branch of a U.S. organization may export products, technology, or services to Cuba or to any Cuban national, wherever they may be located, or broker the sale of goods or commodities to or from Cuba or any Cuban national.” The status of Windows Live as a downloadable software program categorizes it as transferable technology, thereby making it subject to the regulation.

Carrying Out Orders?
The lack of transparency shrouding this incident makes it difficult to ascertain the true motives behind Microsoft’s actions. At first glance, however, the abruptness of the termination by Microsoft raises suspicions of whether the company was pressured into doing so by OFAC, an agency within the U.S. Treasury Department that traditionally has overseen the enforcement of the embargo. Such an assertion is bolstered by the fact that both Google and AOL quite quickly followed suit by ceasing their own instant messaging services in Cuba later in the week. Furthermore, the fact that Windows Live had been utilized as a means of communication on the island for the past decade – in spite of the existence of the embargo – strongly suggests that some form of government intervention caused the surprising ban to all of a sudden kick in.

Despite the lack of truly incontrovertible evidence, the Cuban government believes that the service’s termination was at the behest of the U.S. government. Quite predictably, on May 29, Havana condemned the ban as “a truly harsh violation of Cuba’s rights,” with the state youth newspaper Juventud Rebeldegoing so far as to admonish the action as “just the latest turn of the screw in the United States’ technological blockade against the island.”

If even a small degree of complicity on the part of Washington for the ban exists, the timing of the incident also raises questions about the handling of the Cuba policy by both President Barack Obama and Secretary of State Hillary Clinton. Curiously enough, the termination came at the heels of the administration’s April 13 decision to relax telecommunications restrictions on the island against the average citizen, which was intended to increase communication and interaction between the Cuban people and the outside world as well as amongst themselves. The inherent contradiction of the ban may, in fact, underscore the true nature of the administration’s policy toward the island, characterizing it as confusing at the very least, and as perpetuating the status quo at the worst.

Hasta La Vista, Windows
Despite strong evidence suggesting government involvement, circumstances seem to indicate that Microsoft’s move may actually have been entirely voluntary and premeditated, with OFAC regulations providing a convenient pretext for their actions. It is likely that the termination was the first of perhaps many more punitive and retaliatory counteroffensives in the cyber war, now in effect, which Microsoft is currently waging to protect its dominance in the computer operating systems market.

Since its inception, Microsoft has held an inpregnable position in the market for computer operating systems, to the point that both the U.S. Justice Department and the European Commission have filed successful anti-trust suits against the company in recent years. Even in the face of these unfavorable rulings, it appears that a greater threat to Microsoft’s preeminence is the emergence of open source software (OSS), which offers a substantially cheaper alternative to the company’s ubiquitous Windows operating system. In part due to the explosive growth of various OSS platforms such as Linux and Fedora, the market share of Microsoft’s operating system is eroding, which, according to the market research company Net Applications, fell below the vaunted 90 percent mark – which it never previously had crossed – to 89.6 percent as of December 1, 2008. In the face of this, Microsoft, as reported by the monthly computer magazine PC World, recently acknowledged Linux as a serious competitor to Windows.

Recent initiatives by various governments, particularly those in Latin America, to “migrate” away from Windows operating systems in favor of those based on open source software have contributed to the corrosive impact of Microsoft’s virtual monopoly. Leading the way, an ambitious Venezuelan law (Decree no. 3390) passed on December 23, 2004 dictated the transition of all public agencies – including the enormous state oil company – to OSS systems. Commenting on this software migration, Venezuelan President Hugo Chávez justified the move as vital for fostering “national scientific independence” and reducing the country’s dependence on “privately owned software.” Moreover, in 2005 the Venezuelan city of Maracaibo played host to the Third Worldwide Free Knowledge Forum, which gathered members from major OSS projects in Spain, Brazil, Colombia, Mexico, the United States and Venezuela.

Following Venezuela’s lead, Cuba unveiled its own version of the Linux operating system called Nova Baire – developed at the University of Information Sciences of Havana (UCI) – at the Informática International Convention and Fair held in the Cuban capital in February 2009. The Cuban government hopes to implement Nova Baire in 50 percent of its computers in the next five years, thus moving away from Microsoft Windows.

Substantial progress on such a move has been made as, according to Héctor Rodríguez, dean of the School of Free Software at UCI, 20 percent of Cuban computers already run on Linux-based software as of February 2009.

The Empire Strikes Back
With these initiatives undermining its monopolistic stranglehold on the computer operating system market and other nations joining the movement, Microsoft had to respond in force to preserve its dominance. Thus, the abrupt termination of its instant messaging service in Cuba – a nation it considered to be a ringleader in the movement – appeared to be the first shot in its counterattack. Following this move, Microsoft’s next salvo in this cyber war amounted to a scattershot and maybe even tawdry propaganda against various Latin American leaders. Featured on the homepage of MSN Spain (a Microsoft portal) on July 14 was a slide show of nine world leaders, with each photograph accompanied by a small paragraph lambasting them for what Microsoft perceived were their undemocratic and illiberal principles. The opening slide of this compilation featured a montage of Venezuelan President Hugo Chávez embracing former Cuban President Fidel Castro – both adorned with crowns atop their heads – and to their left was the following title (translated from Spanish): “When power corrupts…Striving to be kings.”

The description accompanying the picture of the Castro brothers was:

“Fidel Castro remained in power in Cuba since 1959, first as Prime Minister (1959-1976) and later as President (1976-2008). When his health started to waver, he, in a purely monarchical style, temporarily delegated power to his brother [Raúl], only to definitely divest it to him in 2008.”

Chávez’s caption reads:

“Oh to what lengths Hugo Chávez goes. He has altered the laws according to his whim and for his own interest. He did the same with the Constitution he himself formulated in 1999, but he had committed an error: term limitations. With his elections in 1999, 2001, and 2007, the law would not allow him to run for the Presidency again. And instead of accepting this, he changed the law. This change occurred at the beginning of this year and it also strips term limitations from governors, mayors, and city councilmen.”

The other admonished leaders included: Álvaro Uribe of Colombia, Nestor and Christina Kirchner of Argentina, Hu Jintao of China, Evo Morales of Bolivia, King Juan Carlos I of Spain, Kim Jong-Il of North Korea, and former French Emperor Napoleon Bonaparte. With the exception of the last two, the countries served by those leaders all have some sort of OSS development project afoot. The inclusion of Kim and Bonaparte – undisputed tyrants on their own right – was, justifiably or not, intended to taint the other leaders – a sort of guilt by association.

Though OSS projects are afoot in both Europe and North America and with these regions also representing Microsoft’s largest markets, the company chose not to attack these areas because of the high degree of difficulty in doing so. Though Latin America is a smaller market for Microsoft – in part because of a 65% piracy rate – the company’s dreary financial outlook as a result of the global recession, coupled with heavy competition in other fields (i.e. Google in search engines; Apple in software and applications), the protection of even the slightest source of revenue becomes exceedingly paramount.

In the midst of what is certainly a cyber war now being perpetrated by Microsoft, the irony of the situation is inescapable – one of the greatest of corporate tyrannies, in an attempt to preserve its powerful hold on the market, rebukes a number of world leaders for purportedly doing the same, cloaking its actions in the garb of rectitude, but actually being motivated by greed, but reluctant to acknowledge this.

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