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Microsoft and Cuba

The market I'm referring to is Cuba. I really hadn't given the issue much thought prior to my recent interview with Allison Watson, Microsoft's corporate vice president in charge of its worldwide partner group. I asked Watson whether she was aware of any Microsoft partners that have done business with Cuba, Iran or North Korea.

"I'm not aware whether there are or aren't," she replied. "We do have local subsidiaries that operate in markets around the world. For example, I have a team that operates in Latin America — they would probably know if there is anything going on."

Now, one could argue that the head of Microsoft's global partner operations should be more up to speed on the status of gray-market activity involving the company's products, at least with respect to its business partners. But you have to give Watson credit for her candor in acknowledging that she didn't know.

The second part of Watson's response is what really intrigued me, though.

"Frankly, from a Cuba perspective, Cuba's not a bad word to anyone outside of the United States," she said.

She's right, of course. The U.S. pretty much stands alone in its refusal to engage Cuba and enable the citizens of both countries to benefit from investment there. And that refusal hurts no one more than U.S. companies, including Microsoft.

No doubt, Microsoft products have been widely used in Cuba for years. And, no doubt, the great majority of those products are pirated. Microsoft has been able to effectively address the piracy problem in countries like China, where our government allows it to operate despite our political differences. As a result, software piracy in China is less outrageous than it has been in the past, and Microsoft has reaped the financial benefits of that.

But when you're not allowed to commercially engage a country, you lose.

At a technology conference in February last year, the Cuban government declared its intention to rid itself of Microsoft software in favor of open-source alternatives. According to an Associated Press report, Communications Minister Ramiro Valdes, who opened the conference, suggested that Microsoft was cooperating with U.S. military and intelligence authorities, and he proclaimed that IT is a battlefield on which Cuba is fighting imperialism.

That event was reminiscent of a March 2006 technology fair held by Venezuela's science and technology ministry to promote the use of open-source software instead of Microsoft products. Anti-American rhetoric is at least as harsh in Venezuela as it is in Cuba, and it has been since 2004, when Venezuelan President Hugo Chavez decreed that all public institutions there must adopt open-source strategies. The difference is that Microsoft has a subsidiary in Caracas. In Cuba, it's not even allowed to compete.

I posted an earlier version of this column in my blog, and it drew an insightful comment from a reader who noted that the world has changed.

"When we left Vietnam, we thought it was lost forever. Now it is an ally. Later, Libya was a threat, and with the same leader as back then, they are now considered our ally," the reader wrote. "Yet after four and a half decades, our obstinacy has prevented us from [engaging] one of our closest neighbors and has prevented our companies from benefiting from the changes that have occurred there. We are truly the last bastion that has failed to recognize that the ghost of Khrushchev is gone."

He's right. And that's not all. There's a certain irony in the U.S. government thwarting competition at the expense of companies such as Microsoft. Looking at it that way makes the government's history of faulting Microsoft for anticompetitive business practices seem awfully hypocritical.



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