Microsoft Anti-Piracy Approach Evolves to Meet Ongoing Threat

REDMOND, Wash. Dec. 4, 2007 – As part of a comprehensive effort to address piracy of its products, Microsoft today announced that the company will increase efforts against piracy and outlined new steps being taken to protect Windows Vista from ongoing and known counterfeiting threats. The upcoming Windows Vista Service Pack 1 (SP1) will include updates that target and disable two types of known exploits to the Windows Vista activation process. Also, as part of SP1, the company is making changes in how it differentiates user experiences for genuine and counterfeit systems based on feedback from customers and partners.

Michael Sievert, Corporate Vice President, Windows Product Marketing

To learn more about what Microsoft is doing to address the challenge of software piracy and how the Windows Genuine Advantage (WGA) program is evolving, PressPass spoke with Mike Sievert, Corporate Vice President, Windows Product Marketing.

PressPass: What kind of progress has the company made against software piracy? How big a problem is it for Microsoft and the industry as a whole?

Sievert: While we’ve made some progress, piracy remains an ongoing problem that faces most industries with strong intellectual property components, and is particularly severe for us, our customers and partners. Software pirates are becoming more sophisticated – not just with their ability to produce high-quality fakes, but in their distribution systems and international reach. Research from the Business Software Alliance (BSA) estimates that annually, 35 percent of software in use worldwide is not paid for, and in certain countries that rate can top 80 percent.

We have to address this. We have a responsibility to our shareholders, partners and customers to promote legal use of our products.

The good news is we are starting to see some progress. This past quarter, we reported that about five percent of Windows desktop OEM revenue growth was attributable to piracy declines. In the last year alone, we have pursued legal action against more than 1,000 dealers of counterfeit Microsoft products, taken down more than 50,000 illegal and improper online software auctions and reached out with our “How to Tell” and anti-piracy focused educational Web sites to millions of customers. While piracy rates are hard to measure precisely, we’re seeing indications from internal metrics, like WGA validation failures, that the Windows Vista piracy rate is less than half that of Windows XP today.

PressPass: What are the latest piracy threats that you see today to Windows Vista, and what are you doing about it?

Sievert: We know that Windows Vista is a lot harder to counterfeit than Windows XP, but we also know that pirates will keep trying. We currently see two primary types of exploits pirates often use to generate counterfeit versions of Windows Vista. One is known as the OEM Bios exploit, which involves modifying system files and the BIOS of the motherboard to mimic a type of product activation performed on copies of Windows that are pre-installed by OEMs in the factory. Another is called the Grace Timer exploit. This exploit attempts to reset the “grace time” limit between installation and activation to something like the year 2099 in some cases.  Implementing exploits involves extreme alterations to key system components and can seriously affect system stability. 

So we are taking action. SP1 will include updates that will target those exploits and disable them.

PressPass: What will happen to systems which have those exploits?

Sievert: Although our overall strategy remains the same, with SP1 we’re adjusting the customer experience that differentiates genuine from non-genuine systems in Windows Vista and later in Windows Server. Users whose systems are identified as counterfeit will be presented with clear and recurring notices about the status of their system and how to get genuine. They won’t lose access to functionality or features, but it will be very clear to them that their copy of Window Vista is not genuine and they need to take action.

This is a change in tactics from our current approach for Windows Vista, and it is based on great feedback from customers and partners. With the original release-to-manufacturers version of Windows Vista we released in November 2006, counterfeit systems can go into a state called reduced functionality mode, which essentially suspends a number of features of the system until the user takes action to get genuine.

Our new tactic, which takes effect with SP1 for Windows Vista and also will be part of Windows Server 2008, due out next year, is a proven and effective way to combat piracy. Customers want to know the status of their systems, and how to take action if it turns out they were victimized.

It’s worth re-emphasizing that our fundamental strategy has not changed. All copies of Windows Vista still require activation and the system will continue to validate from time to time to verify that systems are activated properly. What is changing with SP1 is the nature of the experience for those systems that are never activated or that fail validation.

PressPass: What about after SP1 is released? Will you continue to draw from customer feedback to guide your efforts?

Sievert: As we go forward, we always want to be mindful of our customers and their experience with Windows, and operate the WGA program to be as responsive as possible to feedback we hear. At the same time, it’s important that we be consistent in how the program evolves in the future. We have and will continue to base our decisions on some fundamental principles.

Namely, we want to ensure that through this program, we maintain a great customer experience, and to do so, we will go after pirates and counterfeit software in a way that minimizes any disruption to our genuine customers. We are committed to transparently communicate how the program operates so that our customers and all interested parties clearly understand what’s happening and why. We understand the importance of protecting user privacy and conduct the program in accordance with a clear privacy policy. We are committed to delivering WGA with accuracy by making it a priority in identifying counterfeit software and striving to meet the high standards customers and partners expect of Microsoft. Finally, we are committed to providing great customer service and support. For those systems identified as non-genuine, we will provide resources to help individuals acquire genuine Windows Vista.

These principles will continue to serve as the bar we measure ourselves against in evaluating our anti-piracy efforts and how these efforts evolve over time to meet the continued threat of piracy.

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