- Associated Press - Tuesday, April 1, 2014

SEATTLE (AP) - A former Microsoft Corp. employee accused of stealing trade secrets from the company and leaking them to a blogger pleaded guilty Monday to a federal charge.

Prosecutors and Alex Kibkalo have agreed to recommend a sentence of three months in federal detention, Seattlepi.com reports (https://is.gd/oSvefL ). Sentencing is set for July 1.

Kibkalo pleaded guilty to theft of trade secrets. He agreed to pay Microsoft $22,500, although it was unclear how he owed the money.

Prosecutors had accused the Russian national and former seven-year Microsoft employee of stealing information related to pre-release software updates for Windows 8 and Microsoft’s “Activation Server Software Development Kit,” and giving that information to a tech blogger in France. Kibkalo worked for Microsoft as a software architect in Lebanon.

Kibkalo admitted to sharing unreleased Windows programs as well as company memos and documents; Microsoft investigators contended he was angry after a poor performance review.

Federal agents arrested the man March 19 in the Seattle suburb of Bellevue, where he apparently was traveling.

An internal investigation by Microsoft concluded that in July and August 2012, Kibkalo uploaded the proprietary software to a computer in Redmond and then to his personal SkyDrive account, the federal complaint said.

Kibkalo then provided the blogger with links to the files on his account and encouraged the blogger to share the software development kit with those “who might be able to reverse engineer the software and write ‘fake activation server’ code,” the complaint said.

On Friday, a week after saying it was justified in snooping through the blogger’s Hotmail account to track down the source of the software leak, Microsoft changed course, saying it will refer such matters to law enforcement starting immediately.

The reversal, explained by general counsel Brad Smith in a blog post, followed the revelation that Microsoft searched through emails and instant messages of the blogger who Microsoft believed had received proprietary code illegally.

That search led to Kibkalo. Microsoft turned over the case to the FBI last July.

The company “will not inspect a customer’s private content ourselves” and will refer the matter to law enforcement if it believes its services are being used to facilitate theft of Microsoft property, Smith said Friday.

Microsoft owns Hotmail and the cloud storage service formerly known as SkyDrive.

Microsoft investigators interviewed Kibkalo in September 2012, and Kibkalo admitted he had provided confidential Microsoft products and information to the blogger, including “internal unreleased ‘hotfixes’ for Windows 8, ‘code for the PID generator’ (a technical description of the SDK), unreleased versions of Windows Live messenger and documents and presentations about products,” an FBI agent said in the complaint.

The Windows 8 hotfixes were intended to update and correct critical operating system flaws prior to the release of the operating system.


Information from: Seattle Post-Intelligencer, https://www.seattlepi.com/

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