Channel Chief
David Finn
“Conducting raids is the last resort”
 As Microsoft’s Associate General Counsel for worldwide anti-piracy and anti-counterfeiting, David Finn oversees the company’s global enforcement efforts against organized crime syndicates engaged in piracy. On his recent visit to India, Finn spoke to CRN Executive Editor Dhaval Valia
The piracy rate in India has come down from 72 percent in 2007 to 69 percent in 2008. Is this in line with Microsoft’s expectations?
In comparison to other emerging markets, India has been a slow and steady market for us when it comes to reducing piracy.
For instance, in Russia, the piracy rate has come down by almost 13 percent over the last two years on the back of the government’s strict enforcement of IPR regulations.
Having said that, I must also mention that India is a unique market for our anti-piracy program because we have relied more on engagement than enforcement.
Our aim in India has been to engage with local channel associations for working toward creating awareness among customers about the disadvantages of buying pirated software. In no other emerging country we have adopted this model of working with regional channel bodies.
During my current visit, I am meeting local associations to see how we can work more closely to curtail piracy here.
What new channel engagement initiatives have you planned?
Our meetings with representatives from TAIT and Confed-ITA have highlighted the need for better channel education about our offerings. We admit that we probably haven’t done a very good job of educating the channel sales force so that they could take our message to end-consumers about the advantages of genuine software.
To give you an example, a common misconception among channels is that our products are highly priced, and this is the primary reason why people engage in piracy. The ground reality is quite different: various editions of our products are available at affordable rates. Consider Windows Starter Edition, which is priced at Rs 5,000, and includes all the software a home user may require—yet very few partners seem to know this.
Based on this feedback, we have resolved to invest in conducting regular training of the sales force of members of various channel associations.
Additionally, we are working on a plan to focus on a few cities in India where we can make a dramatic difference in piracy over the next one year. The aim is to identify these cities, run our anti-piracy programs there, and measure the change on the ground to understand the effectiveness of our programs.
We frequently hear about raids by Microsoft sleuths in different cities and also complaints about your company’s high-handedness in dealing with the issue. So if engagement with the channel is what you seek, why use the extreme method of enforcement?
Enforcement is the most fundamental element of our anti-piracy program which operates on 3Es—Education, Engineering and Enforcement. Education is where we educate partners and customers about the perils of piracy. Engineering is about developing anti-piracy tools.
Even when it comes to enforcement, conducting raids at resellers’ premises is the last resort. We use all means to ensure that the person dealing in pirated software is amply warned and complies with IPR rules.
Often we get leads about those dealing in pirated software from resellers in the same city. Honest resellers offering genuine software are disadvantaged by those selling pirated versions, hence many dealers inform us and expect us to act against such elements.
We have a piracy hotline where consumers and resellers lodge complaints about operators selling counterfeits. We have plenty of customers sending us scanned copy of their purchased software package to check if it’s genuine. This often becomes the basis of our investigation and the subsequent enforcement measures undertaken.
In one of your earlier interviews you had underlined the involvement of global crime syndicates in the piracy business. Could you provide us some facts about how these crime syndicates cooperate and operate around the world?
The crime syndicates involved in this business are very sophisticated. A raid conducted in China a couple of years ago uncovered a group of operators who worked in tandem to produce high-quality counterfeit products and distribute them all over the world. The scale of their CD duplication line was even bigger than Microsoft’s total software production capacities in Europe, Middle East and Africa (EMEA).
Every time a consumer buys a counterfeit product, knowingly or unknowingly, he is actually financing these syndicates. By conservative estimates, Microsoft loses $2 billion every year due to piracy.
We collect counterfeit products from all over the world and conducts tests. So far we have conducted code translation tests on 350 counterfeit software CDs collected from 17 countries and found that nearly 42 percent of them had bugs, malicious software and codes or various spy software. Nearly 30 percent of them didn’t boot or install. These bugs do not exist in Microsoft’s legal software codes. Obviously, one of our responsibilities is to tell customers that it is risky to use counterfeit products.
Often it’s the customer who forces the reseller to sell a pirated copy. He demands that the reseller pre-load software free of cost or else he will buy it from someone who will.
What we have found is that when a channel sales person is well educated, and the value of genuine software is adequately articulated to the end-customer, the ratio of walk-in customers purchasing genuine software is upward of 50 percent. This suggests that customers are not always bent on getting software for free.
Five years from now, where do you see the software piracy rate in India?
I don’t have any specific number in mind, but going by our experiences in western markets we have seen that as a country prospers economically there is a tendency for piracy to go down. This happens due to several reasons. One of them is that, with economic prosperity the government becomes more stringent in IPR enforcement, while customers become more mature and aware.
Western Europe, for instance, had a piracy rate as high as 75 percent in the early nineties, but this came down to 30-35 percent within a decade.
In India, the IPR laws are among the strongest in emerging countries, but the government’s commitment to enforcing them needs to improve. With the confident strides India is making economically, piracy rates should come down significantly. |