Kaspersky to Close Washington Office But Expand Non-State Sales

(Bloomberg) -- A Russian software-maker, whose products are banned for use in federal information systems by the U.S. government, is seeking to remain in the North American market and prove its products have no hidden capabilities.

Kaspersky Lab Inc. will close its Washington D.C. office that was selling to the government and will keep working with non-federal customers in the U.S. via its remaining offices in the country, vice-president Anton Shingarev said in an interview in Moscow. The company also committed in October to open its product's source code to an independent third-party review and plans to open new offices in Chicago, Los Angeles and Toronto next year.

"This allows independent experts to verify that our software has no hidden functionality, that it doesn't send your files to third parties, doesn't spy on you and fully complies with the end-user agreement," Shingarev said. 

The U.S. banned government use of Kaspersky software in September, citing founder Eugene Kaspersky's alleged ties to Russian intelligence and the possibility its products could function as "malicious actors" to compromise federal information systems. The move caused concern about the company's products in other markets, including the U.K.

Losing state clients may cost “single-digit” percentage decline in the company's U.S. revenue, Shingarev said, and added that Kaspersky is receiving questions from clients about its software's security after the government ban.

The U.K. restrictions are different from the U.S. ones, Shingarev said. Britain's National Cyber Security Centre only "advised" U.K. government bodies working with classified information against choosing Kaspersky software, according to a letter on its website.

"We are in talks with NCSC and are trying to figure out what's needed to deserve an opposite recommendation," Shingarev said. "In general, they support the idea of opening the source code of our software for independent audit."

"What I like about Europe is that their regulators are fact-driven," he said, adding that the U.S. ban was instead based on "emotions" and "speculations."

Kaspersky plans to create Transparency Centers in the U.S., Europe, and Asia, within which its software's code can be analyzed by independent experts. "There will be a SCIF-class facility with security cameras, no internet, and independent experts analyzing our code with Kaspersky employees answering any questions they have," Shingarev said

Shingarev said the company doesn't want Russia's government to block its country's use of American software -- such as products from Symantec Corp. and Intel Corp.-backed McAfee -- in retaliation to the U.S. restriction.

"I am against any bans," he said. "Any protective measures could be very dangerous long-term. We have great expertise in protecting banks against Russian hackers and if U.S. were to ban us from their banks it would be shooting itself in a foot." 

The same is true for Russia, Shingarev said. "Too aggressive protectionism would kill competition."

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net.

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Nate Lanxon

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