Microsoft Declines Comment on Alleged Complaint to China

09/20/2012| 04:13pm US/Eastern

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--Reports say Microsoft named four state-owned companies in IP complaint

--A 2011 Microsoft study found Chinese manufacturers rely on pirated software

--Only 31% of PCs used in Chinese manufacturing have licensed software

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   By Steven D. Jones 
 

Microsoft Corp. (>> Microsoft Corporation) filed a complaint with a Chinese government panel last month alleging piracy by four state-owned companies, Bloomberg News reported Thursday.

The complaint claimed that China National Petroleum Corp., China Railway Construction Corp. (1186.HK, 601186.SH), Travelsky Technology Ltd. (0696.HK) and China Post Group used unlicensed Office and Windows software, Bloomberg reported.

Microsoft declined to comment on the report, noting that it works with organizations around the world to limit piracy. "This includes ongoing discussions with China about promoting innovation and protecting intellectual property," Microsoft spokesman Mark Lamb said in a written response to questions.

"We are pleased with the progress China has made to protect IP over the past year, and look forward to continued progress in the year ahead," the statement said. Mr. Lamb declined to confirm or deny whether the Redmond, Wash., company had complained about piracy at state-owned companies.

A study funded by Microsoft last year found that roughly two-thirds of the computers used by Chinese manufacturers were running stolen software.

Microsoft's Windows operating system and its Office suite of productivity tools are the most frequently pirated software, according to the report. In spring 2011, about 18 months after the release of Windows 7, copies of the operating system and Office were available from street vendors in many Asian countries for under $10. At the time, Windows 7 Professional sold for $239 at U.S. retailers.

In China alone, the study estimates licensed software is operating on 5.2 million PCs used in manufacturing--only 31% of the total. Chinese companies relying on pirated software enjoy an aggregate $837 million advantage annually over competitors that chose licensed software, the study found.

Microsoft, which has sold nearly 500 million licenses for Windows 7 and more than 100 million licenses to Microsoft Office 2010, says piracy remains a problem for the company, although it doesn't disclose specific losses.

At its annual shareholders meeting in 2011, Chief Executive Steve Ballmer told shareholders, "I wish I could tell you there has been no piracy, but unfortunately there has been quite a lot."

Write to Steven D. Jones at steve-d.jones@dowjones.com

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