Microsoft Report: Firms in BRIC states affected by massive software theft

Manufacturing companies in Brazil, Russia, India and China (BRIC) that choose to use illegal software steal more than $1.6 billion from their in-market competitors that opt to play fair by using genuine software.

This is according to a Microsoft report released today which tackles the financial impact using illegal software has on the competitive landscape within developing countries as part of Play Fair Day, a global initiative to emphasize the importance of using legitimate software. The Microsoft-commissioned study quantifies the anticompetitive harm software piracy inflicts on businesses that play fair.

As part of a study to examine the broader economic impact of software piracy, analysts from Keystone Strategy evaluated the unfair competitive advantage enjoyed by companies that practice widespread piracy.

In China, for example, manufacturers that “play fair” with legal, licensed software suffer a competitive disadvantage of about $ 837 million compared with companies that illegally slash costs and use pirated software.

This harm translates into the opportunity for pirating firms to increase profits or reinvest in their businesses. For example, pirating firms can reinvest the $ 837 million to construct 66 major manufacturing plants, buy 12,700 molding machines for a plastics manufacturer or hire 217,000 additional employees.

Manufacturing accounts for 16 per cent of Russia’s gross domestic product. Russian manufacturers who play fair are disadvantaged more than $575 million over the five-year software lifespan. Severstal, which is the second largest steel manufacturer in Russia, has committed itself to choosing legal software.

“This research quantifies the harm unfair competition causes in emerging markets. And this is not just a problem that harms businesses in emerging markets,” said David Finn, Microsoft’s associate general counsel for worldwide anti-piracy and anti-counterfeiting.

A sample of a fake Microsoft Windows Vista CD

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