Durban, 21 Nov 2008
Two Durban-based computer outlets, Computer and Electronic Services in Smith Street and World Wide Web in the Bluff, have been raided by police for allegedly selling PCs pre-loaded with illegal software to unsuspecting consumers.
The raids were the culmination of extensive investigations by Microsoft, including undercover test purchases, after complaints were received from other resellers in the region. One of the outlets, Computer and Electronic Services, was also in breach of a civil settlement signed with Microsoft in April 2008 following a previous investigation and infringing test purchase.
Both shops were engaged in what is known in the industry as hard-disk loading. This is when PC suppliers install unlicensed Microsoft software onto a PC and then sell it, often without a genuine certificate of authenticity or the original media, at a full or often discounted price. The SAPS' Commercial Crimes Unit, with the assistance of the Cyber Crimes Unit, is currently investigating the cases further.
Microsoft SA's anti-piracy manager, Charl Everton, said the raids were the latest in a series of crackdowns designed to protect honest consumers and resellers. This year, Microsoft has reached settlements totalling hundreds of thousands of rands with local computer dealers selling computers loaded with unlicensed Microsoft software.
“People could easily buy this software with the best of intentions, only to find later - when they try to register, or obtain support - that they have been conned. The software is unlicensed, irrespective of their honest intentions,” said Everton. “Many customers don't realise they have illegal software until they have to validate online via the Windows Genuine Advantage or Office Genuine Advantage tools, which form part of the process of downloading crucial software and security updates.”
Illegal software doesn't only cost the big vendors. It negatively affects the entire IT ecosystem. Estimates by technology researcher IDC suggest that worldwide, the industry is losing more than $10 billion a year from pirated desktop software. IDC reports suggest that the proceeds of counterfeiting help fund organised crime, and impacts directly on job creation and economic development in this country.
Jennifer Pillay, branch manager at computer distributor Ingram Micro, said she was delighted at the ongoing crackdown on illegal software. “This is levelling the playing fields for honest system builders, who refuse to load 'free' software onto the systems they sell, and lose significant amounts of business to the pirates, who sell their systems with unlicensed software to undercut the prices of honest competitors,” said Pillay. “These guys are literally stealing our livelihoods, and we support any actions that stop them.”
Everton says the ongoing crackdowns and legal actions are about protecting Microsoft's customers from falling victim to some dealers who operate a business model of peddling pirated and counterfeit software.
“The raids are indicative of the need to ensure that dealers cease their illegal activity so that customers can be sure that they purchased genuine, fully licensed software,” said Everton. “Resellers who sign civil settlements with Microsoft need to know that they will continue to be monitored, and we will take firm action when we find evidence of future infringements.”
Dale Waterman, Microsoft's corporate attorney for anti-piracy in the Middle East and Africa, said the support of law enforcement agencies like the police was crucial to combating piracy and counterfeiting in South Africa.
“We maintain a constant presence within the channel and work to actively identify and target those who compete unfairly by selling or distributing illegal software and components,” said Waterman. “One way we do this is through a 'test purchase' or 'mystery shopping' programme, where we purchase software in much the same way as consumers make their purchases. If the software is found to be pirated or counterfeit, then we will take whatever legal steps are necessary to protect our honest channel partners.”
In South Africa, one in every three copies of Microsoft software is used illegally. Estimates suggest that reducing piracy by 10 percentage points over four years could generate an extra 1 200 jobs in the local IT sector, R6 billion in local industry revenue and R490 million in additional tax revenues.
Microsoft offers a site dedicated to distinguishing genuine, properly-licensed software from pirated software, www.howtotell.com. The site also offers tips to help resellers and end-user consumers to avoid purchasing unlicensed or counterfeit software.
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