Talks on software pricing expected between Microsoft, Defense Ministry

Two sides are unlikely to settle dispute in court, officials say


Korea’s Ministry of National Defense and Microsoft are expected to engage in talks over the price of software licensing provided by the global software developer following heightening tension between the two sides on the matter.

An official with the ministry said that it is currently reviewing an official document sent by MS on May 29, and will seek to negotiate with MS to fine-tune their differences over the price, without giving a timeline.

However, MS is still waiting for an official response from the ministry, despite having sent three letters since early this year which requested for talks and information on the status of MS software currently being used by the agency and other military units such as the Army, the Air Force and the Navy, an MS spokesperson said.

It has sent those official forms as a means to protect the company’s basic intellectual property rights.

He added that MS is maintaining its communications channel with the ministry’s chief information officer Yu Chul-hee, even though the company has not yet received any feedback.

The document contained a demand for 200 billion won for using its software, the defense official noted, adding that this amount was an estimation based on MS’ own assessment, on which the ministry cannot agree.

MS declined to confirm on this figure, but said that it has gathered data on the ministry’s IT assets from the agency’s homepage and Korea’s Public Procurement Service.

The defense official said that this has been miscalculated as only some of the ministry’s or other military units’ PCs or other devices are connected to the so-called MS Client Access License servers.

The ministry also uses other data-processing server systems such as Unix, Linux and Oracle. When enterprises or agencies purchase servers, they need to buy a software license as well, the official explained.

Both sides, however, agreed that it is highly unlikely that they will end up resolving their differences in court, even though MS’ documents included a written statement that the company would seek legal action if potential talks break down.

MS will only negotiate with the Defense Ministry through a nondisclosure agreement in order to make an appropriate contract over its software use as it concerns national security.

In a statement, MS said that CEO Steve Ballmer had not been reported to on this matter, nor did he make any comments about it during his stay in Korea for the 2012 Seoul Digital Forum.

The Defense Ministry, meanwhile, said in a press release that both sides need to hold discussions over the issue of MS having unilaterally set software prices since 2009.

By Park Hyong-ki (hkp@heraldcorp.com)