Wednesday, July 25, 2007

What is the Chinese word for “kabuki"?

Tuesday, US and Chinese authorities announced seizure of a half-billion bucks worth of counterfeit US software. This is not like bootleg tapes from the back of a pickup at a U.S. swap meet. The NYT reported:

The F.B.I. and the Chinese identified criminal organizations producing and distributing counterfeit software in both Shanghai and Shenzhen. …

Microsoft’s 75-member antipiracy team had been tracking a Chinese syndicate since May 2001, when counterfeit discs of the Windows Millennium operating system were found in Southern California. Since the investigation began, Microsoft investigators have found 55,000 discs.

The Chinese syndicate thought to have been involved had 30 production lines. Based on its examination of the discs, Microsoft said a conservative estimate of the value of the software sold by the criminal group was $2 billion.
This reminded me of a (perhaps apocryphal) story I heard many years ago about a friend of a friend. My friend said his friend was the China representative of the BSA, the “anti-piracy” trade association for Microsoft and the other big software vendors. The BSA rep was supposed to be stamping out software piracy in China, but lived in Hong Kong and only went to China when the government staged seizures for publicity purposes. When he wasn’t in the presence of the police, he feared physical retaliation from the Chinese syndicates.

Of course, many people have argued for years that Microsoft is better off having its software stolen than have customer adopt (and thus develop switching costs for) competing software. I understand the arguments, and while I still am skeptical, they don’t seem as implausible as when I first heard them (from a marketing professor) more than a decade ago.

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