The Continuing Fight for Genuine Software

REDMOND, Wash., April 24, 2006 — For those outside the software industry, it can be difficult to appreciate the scope and impact of one of the industry’s biggest problems, counterfeit software. The Business Software Alliance has estimated that 35 percent of all PC software used worldwide is counterfeit or otherwise illegal, and the recent IDC Economic Impact Study asserts that if the piracy rate was lowered by 10 percentage points over the next four years, this would contribute 2.4 million new jobs and US$400 billion in economic growth to the global economy.

The negative impacts of counterfeiting and other forms of software piracy extend from the companies who wrote the software through the ecosystem of local resellers worldwide who depend on software sales, down to individual consumers. Counterfeit software can even expose consumers and businesses to spyware, viruses, faulty code and identity theft.

Microsoft is committed to protecting consumers and software resellers from counterfeit software and other forms of software piracy. The company recently announced an expanded focus on those efforts through creation of the Genuine Software Initiative (GSI).

As part of the Genuine Software Initiative, Microsoft will expand a pilot of the Windows Genuine Advantage (WGA) program that provides notifications to consumers using non-genuine Microsoft Windows XP.  Most customers will experience no change, but, for customers who are running a non-genuine copy of Windows, the new feature will enable notifications directly to their desktop that the copy of Windows they are running isn’t genuine. The Windows Genuine Advantage program was launched in July 2005 to provide an improved experience for consumers using genuine Windows XP and to help Microsoft address software piracy.  To date, the owners of more than 150 million PCs have participated in the program.  The first phase of the notifications pilot was launched in Norway and Sweden in November 2005, and in February 2006 in five additional countries. Today, Microsoft will expand the pilot to customers in the U.S., United Kingdom, Malaysia, Australia and New Zealand. In addition, Microsoft is piloting Microsoft Office Genuine Advantage (OGA) this week to help customers determine if they have a genuine installation of the Microsoft Office system of productivity applications. The program will initially be piloted in seven languages: Brazilian Portuguese, Czech, Greek, Korean, Simplified Chinese, Russian and Spanish.

According to Cori Hartje, director Microsoft’s Genuine Software Initiative, “The best way to protect consumers is, first, to educate them about the issue, then to equip them to spot counterfeit software, and finally, to help them understand what they should do about it,” she says. “That’s why we are working to build new tools such as the WGA notifications feature that can help consumers be confident that the software they are using is genuine.”

“Customers tell us they want to know whether they are running a genuine copy of Windows, and the WGA notifications feature is a simple and effective way to help them,” says Hartje. “And along with the confidence of knowing they’re running the software they paid for, participation in WGA also gives them full access to updates and new features. The WGA program has been successful in helping our customers get additional value out of their genuine Microsoft Windows. So we believe that having a process for notifying users of counterfeit software serves an important purpose, and, based on the initial success of the WGA notifications feature, Microsoft has decided to expand it and offer notifications to customers in additional markets.”

Local system builders also see additional value from WGA. Across the globe, the smaller companies that depend on software sales have noticed an improvement in their business as customers work to make fully licensed and genuine product purchases.

“Having an easy way to demonstrate the value of running genuine Microsoft Windows helps us in turn to earn revenue licensing that software,” explains Jeff DiBella, vice president of sales for Maryland-based AOpen Center, a Microsoft Gold Certified system builder. “WGA helps us save customers time and headaches, and it also gives them access to faster upgrades, add-ins, powerful software utilities and tools.”

Cori Hartje, Director, Genuine Software Initiative

According to Microsoft’s Hartje, in addition to educating customers about the benefits of genuine software, the feedback gained from those who participate in the WGA program is an important element in the battle against illegitimate dealers.

“Consumers who participate in the WGA and OGA programs have the opportunity to report the source of a counterfeit installation,” Hartje says. “This is an important tool for us in identifying unscrupulous resellers.”

According to David Finn, a director of Legal and Corporate Affairs for Microsoft, legal action taken by the company is the culmination of a long process that can begin with validation. Often, leads are provided by consumers who participate in the site’s validation and notification processes, and who discover that the software they’ve acquired is not genuine. Microsoft also conducts its own verifications through a test purchase program, whereby the company acquires hardware and software products and examines them to determine if they’re authentic.

“Today’s licensing enforcement is a sophisticated, targeted process,” says Finn. “Microsoft has a dedicated team that works throughout the world to carefully identify leads, test software and educate consumers and the channel on the importance of genuine software. Whilst we look at legal action as a last resort, Microsoft will protect honest resellers and consumers by challenging those who persist in dealing with non-genuine or illegal software. The company works with local laws and law enforcement to take appropriate action when a channel partner is found to be selling or installing counterfeit and pirated software, and duping our end customers, who believe they are paying for genuine products.”

In the United Kingdom, more than 21,000 suspected illegal sales were halted on eBay in the second half of 2005, including one group that sought to trade millions of pounds (GBP) worth of counterfeit software to consumers. In Italy, numerous civil cases are being instigated following leads established from successful test-purchase campaigns.

Whenever non-genuine software is identified, the first action is to educate the parties involved on the ramifications of counterfeit software, says Finn.

And, according to Hartje, education is not only the first step, it is the cornerstone in the fight against non-genuine software. “Education is very important to helping the partners understand the risks involved with selling and installing counterfeit software,” she says. “It is our goal to have a very healthy software selling ecosystem where resellers and system builders have a level playing field without the threat of competitors selling counterfeit products to our mutual customers.”

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