Moscow Drops Microsoft on President Vladmir Putin's Call for Self-Sufficiency

Moscow city will replace Microsoft Corp. programs with domestic software on thousands of computers in answer to President Vladimir Putin's call for Russia's authorities to reduce dependence on foreign technology amid tensions with the US and Europe.

The city will initially replace Microsoft's Exchange Server and Outlook on 6,000 computers with an e-mail system installed by state-run carrier Rostelecom PJSC, Artem Yermolaev, head of information technology for Moscow, told reporters Tuesday. Moscow may expand deployment of the new software, developed by Russia's New Cloud Technologies, to as many as 600,000 computers and servers, and may also consider replacing Windows and Office, Yermolaev said.

Putin is urging state entities and local companies to go domestic amid concerns over security and reliability after US firms shut down paid services in Crimea following Russia's 2014 annexation. The plan poses a challenge to the likes of Microsoft, SAP SE and Oracle. in the country's $3 billion software market. Adding to pressure, Putin's internet czar German Klimenko wants to raise taxes on US technology companies to help Russian competitors such as Yandex NV and Mail.ru Group Ltd.

"We want the money of taxpayers and state-run firms to be primarily spent on local software," Communications Minister Nikolay Nikiforov told reporters. From 2017, government entities including the Federal Anti-Monopoly Service, General Prosecutor's Office and Audit Chamber "will be tightening their grip" on state institutions that aren't switching to domestic alternatives, he said.

Microsoft declined to comment.

Government entities spend about RUB 20 billion ($295 million or roughly Rs. 1,970 crores) a year on foreign software, according Nikiforov. His ministry has produced a list of nearly 2,000 Russian software products that state-run companies should use instead of products from global vendors.

Moscow's government has already switched Cisco Systems Inc. technology for city surveillance cameras to local software, Yermolaev said. State media company Rossiya Segodnya and Moscow's regional government switched from Oracle database systems to open-code PostgreSQL software supported by local programmers, according to Digital Russia.

© 2016 Bloomberg L.P.