Microsoft 'Anti-Piracy' Campaign Explains Why It's Bad For Businesses To Pay For Microsoft Software

from the i-don't-get-it dept

Fri, Nov 18th 2011 9:55am — Mike Masnick

In the distant past, Microsoft used to be willing to admit that -- especially in developing countries -- the company was significantly better off due to infringement. Bill Gates famously said: "As long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade." More recently, of course, Microsoft has been increasingly aggressive when it comes to its anti-piracy campaigns. The company recently did a PR stunt around Global Play Fair Day, in which it released a study, done by Keystone Strategy, which I think is supposed to explain the importance of not infringing. However, the message that it actually seems to be sending is: "paying for Microsoft software is bad for business."

I'm not joking.

The key point that we learn is that companies in Brazil, Russia, India and China "ultimately have a $1.6 billion (U.S.) competitive advantage over companies that play fair by using genuine software." In other words, if you pay for our software, you're at a competitive disadvantage. Some of the other points from the press release, which only seem to drive this point home further:

Piracy creates more than $2.9 billion of competitive disadvantage per year across manufacturers in Latin America, Central and Eastern Europe and Asia-Pacific regions.
In specific countries, Keystone determined how much pirated software harms manufacturers playing by the rules as follows: Brazil ($186 million), Russia ($115 million), India ($505 million), and China ($837 million).
Over a five-year software life cycle, manufacturing companies in BRIC countries will lose more than $8.2 billion to their cheating competitors.
There are more than 4.1 million PCs legally licensed by manufacturing firms that play by the rules in China. The competitive disadvantage to these firms amounts to about $837 million annually, or $4.18 billion over the typical five-year software life cycle.
Indian manufacturers experience $505 million per year in competitive harm. Their pirating competitors could use this money to hire more than 215,000 new employees.

That last one seems to be saying: "pirating software creates jobs!" Again, the overall takeaway from this appears to be that paying for Microsoft software is bad for business, puts you at a competitive disadvantage and is going to cost you millions. I guess kudos for the honesty, but I'm sorta confused as to why Microsoft is sending out this kind of message. Well, chances are that it's part of a push to influence not companies, but policymakers to "crack down." But, even so, it's an odd campaign. If not paying for software gives you such a huge advantage, couldn't this also be interpreted as a massive promotional campaign for free and open source software?

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Filed Under: bric, competitive advantage, infringement, piracy, productivity
Companies: microsoft

35 Comments

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Designerfx (profile), 18 Nov 2011 @ 10:03am

I agree
my thoughts were "wait....working with a convicted monopolist is 'fair'"?

I noticed they added brazil. Guess they're not happy after the JTC huh!
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A Guy (profile), 18 Nov 2011 @ 10:04am

I think it's a move to get regulators to ban imports from the offending companies.
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Michael, 18 Nov 2011 @ 10:05am

(Typical mindset of the average consumer)

Open source, what's that? It sounds like a hooker instead of a girlfriend.

Honestly, they probably don't even know what open source is, or how good it can be. Plus it doesn't have the same broken compatibility they've come to expect from MS Office file formats. It also lacks those task-management checklists in Outlook. Finally there's the /impression/ (logical fallacy) that if you're paying for something it must be better than the free alternative.
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Anonymous Coward, 18 Nov 2011 @ 10:06am

"us vs. them"
They probably believe somehow that they're creating an "us vs. them" situation where U.S. companies hate non-U.S. companies because they don't have to follow the same rules.

Unfortunately, most business types will look at this from a different perspective: How can we move our operations out of the U.S. so we can save money?

Great for the economy! Well, maybe not in the U.S.

On the other hand, communicating that commercial, closed source software is a penalty on business should hopefully continue to push corporations to adopt open source solutions which have a lower capital investment.
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S, 18 Nov 2011 @ 10:08am

Yay, Microsoft!
I can't decide if this is corporate trolling, delusional, or simple incompetence.

Either way, Rome had better invest in some smoke alarms.
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Chris Rhodes (profile), 18 Nov 2011 @ 10:10am

???
You mean government-granted monopolies create market inefficiencies and drive up the cost of goods and services?? Someone call the president!
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Steven (profile), 18 Nov 2011 @ 10:30am

Re: ???
We didn't just call him, we started a petition that he had to respond to.

He thanked us all for our concern, expressed that he shared the same concerns, checked his wallet for which businesses had given him large checks, and then said he would look for broad bi-partisan solutions.
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el_segfaulto (profile), 18 Nov 2011 @ 10:30am

Re:
With what you get from Microsoft, I'd consider that to be the hooker in your analogy.

Open source OS's (let's say Linux and BSD variants) are like having a nice girlfriend. They don't require a whole lot of maintenance but aren't overly flashy. If you screw something up you do need to know an arcane language to smooth things over.

Windows is like dating a two dollar hooker. You're paying for something that you can get for free elsewhere, and are running the risk of viruses.

OSX is a Charlie Sheen level high-class call-girl. She's pretty, she's fun to show off to your friends, but she's expensive and wants new things every few months. Also, the word on the street is she used to be a regular girl until a mystical suitor named Steve J. showered her with affection and a makeover.
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out_of_the_blue, 18 Nov 2011 @ 10:31am

They're past the "loss leader" stage, everyone is "addicted".
No one disputes the old strategy of loss leaders to gain market share; it's only you who think that it's new when done /on the internet/.

>>> That last one seems to be saying: "pirating software creates jobs!"

No, NOT paying Microsoft /allows/ paying labor instead. Doesn't "create" any jobs as such, any more than NOT buying a corporate jet does. For an "economist", you seem to understand little; of course that's because you're trying to shoehorn this into your template.

I'm just surprised that you don't directly say that Microsoft should give away the OS and "sell scarcity". Guess that's a little much even for you.

And of course Microsoft is only setting up some approach to justify new legislation.
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Anonymous Coward, 18 Nov 2011 @ 10:36am

I've been a Microsoft engineer for over 15 years with four of their major certifications dating back to the late 90's. I consider myself an expert on most of their server products. Regardless of the revenue they pull in year over year, Microsoft has been in decline over the last decade. All of their new products, the Powershell-based products, have been horrible upon initial release. You could argue that the "never use an MS product until SP1 is released" mentality has always been there but their "release unfinished now, patch later" attitude has increased significantly over the last few years. From an industry point-of-view, more people are looking at alternatives to MS products than ever before. Barring a return of Bill Gates, I fully expect Microsoft to continue its free fall. It would not surprise me at all, based on the sheer numbers of patents which they hold, that within the next ten to twenty years, they cease to exist as a meaningful technology company and become a full-on patent troll, surviving through the extortion of other companies' innovations. One only needs to look at what they are doing to Android to see that this transformation has already begun. I for one, as a provider of Microsoft solutions, am not counting on them to be there beyond the next decade and have hedged my bets by embracing the drive for alternate solutions.
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Will Best, 18 Nov 2011 @ 10:37am

well...
In order to figure out what you want to do about a problem, you should first analyze what you are dealing with. It seems to me they are interested in getting regulators and businesses that play by the rules to take note.

Who in those countries wants to play by the rules? probably most people are morally interested in not stealing. And that is what this is regardless of what price is being charged and what somebody may think its actually worth. Its not like there aren't cheaper options available to companies, so blaming MS monopoly power is a non-start.

But businesses have plenty of economic reasons to want to adhere to the rules that intellectual property comes with, regardless of how silly those rules/costs may be. They will want their own rules respected, and will most likely end up in litigation at some point for some reason or another and don't want their rampant disregard for rules to become an issue.
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The Logician (profile), 18 Nov 2011 @ 10:43am

This is a quotation from an anonymous Usenet user about Windows, which I thought would be appropriate here:

"Windows [n.] - A thirty-two bit extension and GUI shell to a sixteen bit patch to an eight bit operating system originally coded for a four bit microprocessor and sold by a two-bit company that can't stand one bit of competition."

Also, here is another, however, I cannot recall the source:

"In November 1998 an internal memo leaked out of Microsoft which clearly stated that Open Source software not only performs and scales much better than Microsoft Products (it discussed especially the quality and availability of Linux), but also proposed that Microsoft attack these superior products by "de-commoditizing protocols". In other words, when faced with a superior competitor, Microsoft's preferred approach is to corrupt global standards and to introduce proprietary protocols that bind the user to the Microsoft environment."
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Anonymous Coward, 18 Nov 2011 @ 10:52am

You'd think Microsoft would know enough to lie and instead focus on all the jobs Microsoft would have created if those pirates had actually paid for their copy of windows.
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sftsc (profile), 18 Nov 2011 @ 10:53am

kind of off topic, but here goes...
my experience, ymmv, but heres my story of the morning:

i did an audio installation for the art show prospect 2.0 at the contemporary arts center in new orleans this fall. its been installed for about a month now, and yesterday got a call that the audio had gone out on my piece.

i went there this morning to see that i had inadvertently not gone through the total pita licensing process for my netbook running cubase at the museum. the license expired and the audio went out. i had gone through it on my daw, and seeing as how the software was already registered, time was short, and the registration process sucks, i figured i would be all right.

it took almost 2 hours to get this relicensed and to get my project back up and rolling. mind you, this is a purchased and fully authorized copy of cubase. audacity may be strong enough to handle the complex task that was needed for this install, but i didnt have the time to learn the software to accomplish this pretty intense project.

now i have three options going forward, because ever since this piece was installed, i have gotten 3 new clients:

1. purchase the legal software for new clients, and go through the burdensome licensing process (thereby cutting time i could actually, ya know, be working)

2. i could pirate it. id rather not, but hell, cracked software is easy as cake to use, without having to worry about the crap like the above.

3. i can get with audacity (or something else) and learn it better as time permits.

now you could say that the more expensive, difficult to use program offered a more robust program, so the increased time fiddling with it (not working with it) is justified.

wouldnt have using pirated software worked the same way, without having had to deal without all the bullshit??

and now that i know my specific needs for this type of project, and have more time, i can get into audacity (or ardour) with more depth and learn it better.

idk. with all the insults flying around here the last couple of days, i just wanted to offer one, small, real life perspective.
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Chosen Reject (profile), 18 Nov 2011 @ 10:58am

Re:
Barring a return of Bill Gates, I fully expect Microsoft to continue its free fall.
Bill Gates return would not bring Microsoft back because Bill Gates departure was not the cause of Microsoft's fall. It's quite the opposite. He saw the writing on the wall and got out at the peak so he can leave a legacy, dropping the responsibility of righting a sinking ship on his "friend" Steve Ballmer. He knows it's in decline and he got out while the getting out was good. Everyone will remember Bill Gates as leading Microsoft to the top and Ballmer as driving Microsoft into the ground, but Microsoft was and is going to sink whether Gates or Ballmer or anyone else was at the helm.
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SabreCat, 18 Nov 2011 @ 11:02am

Re: They're past the "loss leader" stage, everyone is "addicted".
"sell scarcity"

Did you read anything about the topic before dismissing it out of hand? You're not even quoting it correctly.
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Anonymous Coward, 18 Nov 2011 @ 11:06am

Microsoft software would be at an even bigger disaster in third world countries if there was some replacement for AutoCad that actually worked like AutoCAD if there was some decent small business accounting package.
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Anonymous Coward, 18 Nov 2011 @ 11:20am

Paying for software costs more than pirating it? Next you'll tell me that companies which have to obey environmental regulations and child-labor laws have higher costs than companies that don't. Crazy!
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Anonymous Coward, 18 Nov 2011 @ 11:27am

Response to: Anonymous Coward on Nov 18th, 2011 @ 11:06am
You would be an instant billionaire if you could build a better product than Peachtree. They still don't support Citrix for crying out loud. Citrix has been around since what, 1997? And yes, AutoCAD is one of those products from an arrogant bastard of a company that needs something better to come along, if not just so Autodesk can disappear off the face of the earth.
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Chris Rhodes (profile), 18 Nov 2011 @ 11:38am

Re:
The point is, they should be talking about how buying legitimate software from Micrisoft will be a boon to the companies in question (Technical support, faster patch cycles, and what have you).

Instead, they seem to have gone out of their way to show how much better off companies were who didn't do business with them. That's not a winning strategy, regardless of what your opinion on IP law is.
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senshikaze (profile), 18 Nov 2011 @ 11:39am

Re: Re:
Best. Comment. Ever.
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Edward Teach, 18 Nov 2011 @ 12:57pm

Piracy makes prices lower for all!
Karsten Self's supply-and-demand analysis of how piracy affects price would seem to apply: 'On Software �Piracy�, Lies, BSA, Microsoft, Rocks, and Hard Penguins', http://linuxmafia.com/~karsten/Rants/piracy.html

Take a look, see if you can find a hole in it. Basic free-market economics. Microsoft is on the wrong side of economics on this one, for sure.
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illuminaut (profile), 18 Nov 2011 @ 1:03pm

Re:
I think it's not so much aimed directly at legislators as it is aimed at the companies who are playing by the rules. The companies who pay for all their licenses tend to be the larger and more influential ones, so by giving them some fodder for being outraged, MS can indirectly influence legislation.

They're basically trying to make their paying customers fight piracy on their behalf, but I can see how it could backfire.
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Krusty, 18 Nov 2011 @ 1:06pm

Micro$oft is the best advertisment for Linux...
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aikiwolfie, 18 Nov 2011 @ 1:25pm

The Answer Is In The Opening Paragraph.
Bill Gates famously said: "As long as they're going to steal it, we want them to steal ours. They'll get sort of addicted, and then we'll somehow figure out how to collect sometime in the next decade."

This is why Microsoft would point out pirating their stuff gives a company a competitive advantage over paying for it. Once a company of any size becomes dependant on Microsoft products, it's very difficult to break away. Breaking away often means changing how the company does business. Changing all of their procedures and processes.

This is because companies using Microsoft products shoehorn their business processes into those products. None of the competitions products work in exactly the same way. Software patents have made sure of that. So any company moving away from the Microsoft paradigm has to endure a lot of pain. Which most companies don't have time for.

So the plan is get them hooked. Then sue for infringement. Microsoft don't care if they put you out of business in the process. There's always someone else to screw over.

Of course Microsoft can't just come out and say "hey go pirate our stuff". They need to try and do that discreetly in an obvious way so that businesses get the message. And right now when Windows market share is dropping, Microsoft really need to get that message out in a hurry to drive up adoption in order to protect their desktop monopoly.

GNU/Linux incidentally is a major competitor for Microsoft in BRIC countries. Brazilians love GNU/Linux. Adoption rates in Brazil are very high and Dell is pushing Linux in China. In general BRIC governments have been moving more and more to GNU/Linux and FOSS products and services.
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Lawrence D'Oliveiro, 18 Nov 2011 @ 1:35pm

Re: more people are looking at alternatives to MS products than ever before
Speaking of PowerShell ...
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aikiwolfie, 18 Nov 2011 @ 1:38pm

Re:
The hare holders already want the company to have a clear split between patent licensing (trolling) and it's traditional software and services product based business.
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John Fenderson (profile), 18 Nov 2011 @ 3:36pm

Re: Re:
The point is, they should be talking about how buying legitimate software from Micrisoft will be a boon to the companies in question

Except that it isn't. The question is, why aren't they lying about that like usual?
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Jeffrey Nonken (profile), 18 Nov 2011 @ 7:09pm

Re: Re: They're past the "loss leader" stage, everyone is "addicted".
Of course not. He only read just enough to be able to argue against it.
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Jay (profile), 19 Nov 2011 @ 8:02am

Re: The Answer Is In The Opening Paragraph.
Of course Microsoft can't just come out and say "hey go pirate our stuff". They need to try and do that discreetly in an obvious way so that businesses get the message. And right now when Windows market share is dropping, Microsoft really need to get that message out in a hurry to drive up adoption in order to protect their desktop monopoly.

That has actually backfired in the past, such as Russia where the police were actually using the pirating to raid places they didn't like. The fact is, competition is eroding their monopoly and that can only be seen as a good thing.
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nasch (profile), 19 Nov 2011 @ 5:20pm

Re: Response to: Anonymous Coward on Nov 18th, 2011 @ 11:06am
They still don't support Citrix for crying out loud. Citrix has been around since what, 1997?

Looks like at least 1993.

http://en.wikipedia.org/wiki/Citrix_Systems
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Baked Potato, 19 Nov 2011 @ 7:13pm

Am now warez free
Last April I had the choice to either stick with XP (warez copy), burn Win7 (also a warez copy) & hope it works, or install OpenSUSE 11.4 from the Live CD I was exploring with.

Everything worked with OpenSUSE. Easier to setup than XP, easier to maintain than XP, and it has many newer features than XP. Three of the four PCs in my home now run Linux, with the last to change over soon.

This has potentially saved me several hundred dollars, and for the first time in years, my PC is is not running any warez.
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TtfnJohn (profile), 20 Nov 2011 @ 6:40pm

Re: Re:
"they should be talking about how buying legitimate software from Micrisoft will be a boon to the companies in question (Technical support, faster patch cycles, and what have you)"

Faster patch cycles? My Linux and BSD systems get patched at light speed compared to waiting for update Tuesday, or whatever day it is, which often don't address the problem to begin with. Often daily. And rarely requiring a reboot.

Tech support? I worked for a major company before I became disabled which paid tons for tech support. Guess what? I had to hold on line as much as anyone else does. (Over two hours at one point before I gave up and fixed it myself in a most unmicrosoft way.) So that advantage is marginal at best.
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nasch (profile), 20 Nov 2011 @ 7:13pm

Re: Re: Re:
Faster patch cycles? My Linux and BSD systems get patched at light speed compared to waiting for update Tuesday, or whatever day it is, which often don't address the problem to begin with.

I think he's comparing purchased Windows to pirated Windows, not to an alternative OS. MS would probably rather not even admit there is such as thing as Linux.
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Kate, 11 Apr 2014 @ 9:33am

Ebay part of criminal gang run by criminals
i been reporting piracy on ebay to microsoft so many times and for over a year now and microsoft done nothing about it, i also telephoned microsoft in ireland and they also done nothing about it, i think it is some of the employees in microsoft who are selling pirated copies on ebay, also distributors initially get registered with microsoft to sell original ms software just to get the certificate to sell it, and later on the distributor starts selling pirated copies,

i telephoned microsoft in ireland and they were absolutely dreadful, so ignorant and never believed me that they were selling pirated copies of ms office software ebay, they just totally ignored it making excuses asking me how you know their pirated copies, can you believe they were asking this sort of silly questions when 1000,s of pirated microsoft software being sold at extremely very low price on ebay, its the inside job of the employees in microsoft who are they themselves selling pirated copies on ebay, thats why when you report pirated ms office software to microsoft they do nothing about it

also why microsoft make it complicated for customers to report piracy by filling out a very long form on their website?

why have microsoft discontinued emails method reporting of piracy? making it difficult for people to report piracy?

its a total scam of microsoft employees

they say help up fight piracy when microsoft themselves fo nothing to fight piracy when you report it

a guy on ebay selling pirated copies for 1 years, i reported to microsoft ans they did nothing about it

inside fraud job of microsoft employees

i think Ebay should be fined and taken to court for negligence of handing pirated copies report doing nothing about it and allowing pirated copies being sold on ebay so easily

since ebay makes most of its money income and profits from sale of stolen goods and pirated software

if no one sold pirated copies of software and and stolen goods on ebay, then ebay would close down

ebay income is generated by stolen goods ans pirated software
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