Microsoft Sues Chinese Pirates

While the suits in Washington are too busy to pass a Stop Online Piracy Act (SOPA), Microsoft has taken the matter into its own hands. It has sued two Chinese retailers – Gome and BuyNow. These two retailers are accused of selling pirated Windows and Office copies in their stores.

Piracy is one the biggest reasons why Microsoft doesn’t make as much profit from China as it does in the US. 78% of all the software sold in China in 2010 was pirated. China is also the second largest piracy market by lost revenues.

Yu Weidong, general manager for intellectual property rights of Microsoft China, said: “We hope that [the lawsuits] will serve as a warning call for computer distributors and sellers to respect intellectual property rights, follow the principles of integrity, lawful conduct and fair competition, and take responsibility for consumers” (FT)

With these lawsuits, Microsoft has taken the high road, instead of kowtowing with the SOPA lobby. There are companies who support SOPA as there is no other way to deal with piracy. GoDaddy has suffered a severe backlash by supporting SOPA, though it withdrew its support later on. Popular social site Reddit will go black on Jan 18, 2012 in protest of SOPA.

Online Piracy has been and will continue to be a contentious issue. There’s no silver bullet and SOPA is a solution which is tantamount to axing the branch you are standing on. That is not to say that piracy is good. Intellectual property of all kinds needs to be protected. There will no incentives for bright minds to produce great software if they die penny less.

Can piracy really be stopped?

When Napster was closed down, a million p2p networks proliferated. Napster has also laid down the path for Torrents, which are the current conduit for piracy. The same thing applies to offline stores too. After all offline stores are a logical extension of online channels for people who don’t either have the means or the will to find the wares themselves. If we follow the Napster model, if one store like a Gome or BuyNow is sued, then a million small stores will rise. Microsoft cannot possibly sue all of them.

Piracy should be stopped but no one seems to have a solution. Most of the solutions we have seen so far are half-cooked, ill-thought or downright ridiculous, SOPA falling into the last category.

Piece meal pricing and the iTunes model has given some respite for the music industry. It was all there but Apple stitched it together. Netflix has done the same thing for the movie industry. In India, Airtel and BigFlix have offered unlimited movie viewing over the Internet. This was a good move with a potential to limit piracy. It was probably ahead of the time for the country which still calls 2MBps speed as broadband and has Internet penetration less than 10%.

With Cloud computing and online operating systems, software industry is slowly moving towards that direction. Between suing pirates and offering piece meal services, software industry might find a sweet spot.

 

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