Microsoft’s Public Policy Goals: Help Foster Growth and Innovation

REDMOND, Wash., Aug. 30, 2005 – Microsoft works year round with policy makers and other stakeholders around the world to advance public policies that promote innovation and help enhance economic and social progress, enabling people to realize their full potential.

PressPass spoke with Jack Krumholtz, Microsoft Associate General Counsel and Managing Director of Federal Government Affairs, about the company’s top legislative priorities when the U.S. Congress returns from its August recess, and how these priorities affect economic growth and innovation worldwide.

PressPass: What will Microsoft’s top legislative priorities be when Congress returns from their August recess?

Krumholtz: Right before the August recess, Congress passed the Central American Free Trade Agreement (CAFTA), which was one of our top legislative priorities this year. We devoted considerable time and energy to this bill over the past several months and were very pleased with Congress’s approval of CAFTA, which we believe will further open the Central American market to Microsoft’s and other U.S. products. We continue to be very supportive of the Administration’s ongoing efforts to enter into other free trade agreements to open up new markets and ensure adequate intellectual property protection in those markets.

While we’re pleased to have closed on that priority, we still have a number of items that we’re going to be working on when Congress returns. Because we’re in the first year of a two-year Congress, it remains to be seen how late Congress will stay in session this year, and many of these issues are likely to spill over into 2006.

In September we’ll be focused on number of other issues, including spyware legislation, which has been a priority for the company over the past several years. We’re going to remain focused on patent reform legislation, the ratification of the Council of Europe Cybercrime Treaty, and Congress’ review of the telecommunications laws. These are going to take us well into 2006 if not beyond.

PressPass: What is Microsoft’s position on spyware legislation? Which — if any — of the bills currently under consideration does the company support?

Krumholtz: Microsoft supports legislation addressing spyware. Spyware has grown beyond simply being a nuisance; it diminishes our customers’ computing experience and threatens their privacy. It’s an important issue that needs to be addressed. Our primary interest in spyware legislation is in making sure that any unintended consequences are avoided. That goes to the scope of the legislation, how spyware is defined, as well as what kind of protection or safe harbors are in place for anti-spyware technologies – which Microsoft and other companies are developing.

We’ve worked very closely with the House and Senate Commerce Committees as they develop their respective versions of spyware legislation. The House already has approved a bill sponsored by House Energy & Commerce Chairman [Joe] Barton [R-Tex.] and Congresswoman [Mary] Bono [R-Calif.], which we’ve endorsed.
PressPass: Do you feel optimistic that Congress will pass a solid spyware bill this year?

Krumholtz: I think there’s a better than 50-50 chance. Because the House has already passed legislation, it’s really going to depend on how quickly the Senate Commerce Committee can move the bill. The good news is that this issue has been around for a number of years now, and the Senate Commerce Committee already has spent a considerable amount of time on the issue, so they’re not starting from square one. Congress is very committed to enacting good spyware legislation.

PressPass: You also mentioned patent reform as one of Microsoft’s top priorities. What are the company’s goals with regard to patent reform?

Krumholtz: We have four primary goals.

First, we want to ensure high patent quality, in part by making certain that the Patent Office has the resources it needs to examine increasingly complex patent applications in the technology space. Second, we support efforts to curb excessive litigation and litigation abuses that have emerged in the patent space. Third, we want to see greater harmonization of the various patent systems around the world. And finally, we support legislation to increase access to the patent system for small inventors.

PressPass: In July, a Senate committee approved the Council of Europe Convention on Cybercrime, clearing the way for a floor vote later this year. If approved, what would this treaty accomplish? Does Microsoft support it?

Krumholtz: Cybersecurity is a top priority for Microsoft, both from a public policy standpoint but more importantly in product development efforts. As such, we are very supportive of Senate ratification of the Council of Europe Convention on Cybercrime. Essentially, what the treaty does is enhance collaboration among law enforcement authorities around the world on cyber security issues. As we’ve seen viruses and other forms of cyber security attacks spread over the Internet, the degree to which law enforcement officials from various countries are able to coordinate and collaborate will make a difference in how quickly we’re able to clamp down on such challenges and apprehend whoever is responsible.

PressPass: In the wake of recent high profile data security breaches, several bills were introduced to protect consumers’ personal information. Would any of these bills have implications for Microsoft and the way it collects data?

Krumholtz: We are generally supportive of the data protection bills that have been introduced. Microsoft actually testified, just before the August recess, at a hearing of the House Energy Commerce Committee in support of such legislation. As currently drafted, the House bill would require companies to adopt information security programs and to notify consumers in case of a security breach. We think both of those requirements would be an effective complement to Microsoft’s own multi-faceted strategy for protecting individuals’ personal information. That strategy includes developing and implementing technological solutions, educating consumers about the ways to protect themselves while online, meeting or exceeding industry best practices on privacy and security, and effective and adequate law enforcement.

PressPass: When [Microsoft Chairman and Chief Software Architect] Bill Gates was in Washington, D.C. in April of this year, he talked about the need for public funding of research.  What can Congress and the administration do to advance increased funding and why is this important?

Krumholtz: Federal basic research and development play a critical role, priming the pump for what we see as “the virtuous cycle of innovation.” Federal basic R&D, when made available widely to the commercial sector, is eventually commercialized, getting the benefits of those technological advances into the hands of consumers and businesses.

This process helps create jobs in the tech sector and beyond, as well as generating revenue – ultimately, tax revenue that can be reinvested to basic R&D. So you have this virtuous cycle that is a very important engine for the economy. A great example of this is the TCP/IP protocol, which was developed by a government agency under the Defense Department in the late 1970s, and which was later commercialized by Microsoft and other tech companies, and ultimately became a key building block of the Internet as we know it today.

Congress and the administration face tough choices when it comes to the federal budget because there is greater and greater competition for increasingly scarce resources. It’s important for companies like Microsoft, the university community and others to help Congress and the administration see why investing in federal basic R&D is an engine for economic growth.

PressPass: During that same visit, Bill Gates also discussed the challenge Microsoft faces in filling jobs in specialized areas due to a shortage of highly trained U.S. professionals. Are there any legislative efforts that Microsoft supports to increase the number of workers in the pipeline to fill these positions?

Krumholtz: There are two sides to this issue. First, we as a nation need to do more to encourage our kids to look at math and science disciplines and get enthusiastic about pursuing careers in those fields. Doing so is critical if we are to ensure that our workforce of tomorrow will have the skills it will need to compete in a global economy. That’s why you see a lot of companies like Microsoft focused on K-12 education and the role technology can play in education.

We also need to do more to enable our existing workforce to use information technology in their daily lives and to be able to pursue employment where a solid understanding of IT is a prerequisite. Microsoft’s Unlimited Potential program, where we partner with nonprofits on the local level, both here in the U.S. and around the world, to establish Community Technology Learning Centers (CTLCs), where the underserved communities are able to develop basic IT skills, is one example of an effort to improve the basic IT skills of our workforce.

The other side of this issue is immigration reform – in particular, business immigration. There are a number of different programs through which businesses are able to hire foreign nationals, even on a temporary basis. All of those programs have fairly significant limitations. For instance, there is the H1-B visa, on which Microsoft and other technology companies rely on to hire foreign nationals where there is not a U.S. candidate with the skills required for a particular position. Federal law limits the number of H1-B visas per year to 65,000, and that number is taken up almost immediately by the candidates who are already in the pipeline.

It’s a significant challenge, particularly when recruiting at our colleges and universities. In many cases, well over 50 percent of the PhDs or masters in computer science and engineering are foreign nationals who, if they’re going to be hired by a U.S. company, need to be hired through the H1-B visa program. The limits on the H1-B program seriously impede U.S. companies’ ability to compete in the global market. It also affects the ability of U.S. companies to keep projects in the U.S. In many cases it’s not a matter of whether the work will be done, but where.

PressPass: You also mentioned reform of the telecommunications laws as a priority. What is Microsoft’s position on the proposed changes to the Telecommunications Act that would affect DSL, cable modem and other broadband services?

Krumholtz: I feel like I’ve come full circle. I was hired in 1995 to advance the company’s and software industry’s interest on what ultimately became the 1996 Telecommunication and Deregulation Act. The goal then was to deregulate the telecommunications sector in a way that would encourage companies to invest more in broadband technologies. Nearly 10 years later, I think it’s fair to say the 1996 act didn’t achieve its intended goal. As a result, Congress and various stakeholders are taking a fresh look at it to see if there’s a way to rewrite the act to encourage the kind of investment that will deploy broadband services widely.

Our interest has always been, from a fundamental standpoint, that we want to see broadband deployed widely. Accordingly, Microsoft supports innovative policies that will maximize the availability of broadband services. In addition, the Internet must remain free and open. Consumers must continue to have the freedom to access any Internet service or application and connect any device without interference from their broadband provider.

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