With just four months to go before the current agreement expires, the Israeli government announced on Tuesday that it would not renew an agreement to continue using Microsoft, and a change in license terms that the company pursued would lead to a steep price increase.
Under a current framework agreement signed in 2013 and extended in 2016, Israel pays more than 100 million shekels ($ 27 million) per year for the rights to use Office desktop software, Windows and server software for ministries and government agencies.
The contract expires at the end of this year, but Gal Amir, a manager of the Ministry of Finance's procurement office, said Israel broke the negotiations for a new agreement that began almost a year ago.
"Microsoft is trying to change the work configuration and move to a licensing model that does not meet the needs of the government and necessarily leads to an increase of tens of millions of shekels in government spending," he said in a statement.
According to the Ministry of Finance, Microsoft wants to change Israel from a licensing system where it owns the software and can use it at its discretion, to a subscription that looks like leasing. The change involves moving data to the cloud.
Microsoft Israel declined to comment.
Industry sources were skeptical that the government would really cut off its long-term relationship with the company and said they regarded Amir's statement as a tactical move to entice Microsoft to improve conditions.
The Treasury may, however, decide to continue to use Microsoft for the use of government PCs only, said a source that asked not to be identified.
"In other areas, such as servers, the process is already underway in which other systems that replace Microsoft and open source software are replacing it," he said. More and more government servers are running on Linux and other open source software, including content management systems such as Drupal and Joomla. "
In any case, the Treasury negotiates the use of Microsoft products in government buildings. In schools, the Ministry of Education also uses Microsoft and negotiates its own agreement.
In the PC segment, however, Microsoft has retained its grip on the market. According to netmarketshare.com data, Microsoft's Windows operating system was used in 88.4% of all PCs in the world from July. Apple & # 39; s Mac OS was in second place, but only had a share of 9.1%.
Linux, an open source operating system, was on board 1.9% of all PCs and Google & # 39; s Chrome OS for only 0.3%.
Unlike Windows, which is a closed system that can only be changed by Microsoft, Linux can be used, modified and distributed by anyone – commercial or non-commercial under the terms of its respective licenses and can be downloaded from the Internet.
Experts say that Linux has a big advantage because of the fact that the software itself is free. Among other things, Linux-based systems will less often be the target of a hacker.
A few months ago, the government's IT authority said it would gradually switch to open source, a move that would allow independent developers to build applications and improve service to the public, as well as weaknesses in code, bugs and risk of identifying cyber attacks. By using open source, smaller ministries with a limited budget can also gain access to tools that have been developed in larger ministries.
Microsoft's dependence on the government has been a source of controversy for years, with critics saying that the state pays too much and allows a company to dominate the market. In 2003, the Treasury made a similar announcement as this week that the Microsoft contract would not be renewed. But that did it.
Open source predictors have spent years trying to persuade officials to leave Microsoft and in 2010 a governmental committee investigated alternatives, but when Tal Haramati, then the deputy accountant general, said there were no "quality alternatives" for Microsoft products.
Yet many governments in developed and developing countries, in search of cheap software for computers and servers, have switched to Linux. China, India, France, Germany, the United States and even North Korea have built Linux distribution systems for government agencies.
If discussions with Microsoft are not resumed, the Treasury said it has retained the right to use the Microsoft products it has already purchased – it simply has no right to newer versions. However, Microsoft needs to provide updates and security patches.
Israel plans to freeze the existing licensing structure of government ministries, which can be used without further payment.
Gov & # 39; t says that the contract for Microsoft software will not be renewed
Treasury breaks off contract negotiations and says the American company will significantly increase costs.