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Partners Raise Concerns over Microsoft’s Anti-Piracy Actions

Amit Singh

Channel partners are raising concerns against Microsoft’s harassment of their customers in the name of checking piracy. While Microsoft cracks down on unlicensed software usage under its global Software Asset Management (SAM) program through its third-party agents (KPMG, PWC, Deloitte and E&Y in India), many partners allege that the agents don’t follow the legal process in most of the cases.

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As per the recent statement from President, Punjab Association of Computer Traders (PACT), “Agents barge in the premises without taking appointment from the customers or permission from the competent authorities including courts or police. They don’t even take channel partners in the loop and harass our customers, which is against the law.”

Partners accept software piracy as a rampant problem with over half of all software installed on computers in India being unlicensed. However, they condemn the methods taken by the agents to act against anti-piracy.

“There is no denying that software piracy is a deep-rooted problem; many MSMEs do purchase pirated versions of the software. In many cases, they buy few genuine basic editions and start using pirated versions of advanced editions. However, barging into their premises without permission and threatening them is totally unlawful,” said Manish Tandon, Director, Questa Software.

He added that he had observed many cases over the last few years where even customers with genuine software licenses were targeted by the agents.

Request for comment from Microsoft over the issue went unanswered despite follow-ups.

Things getting complicated for Microsoft

Microsoft recently came under fire after a complaint from Vinit Goenka, a senior BJP member and an IT adviser to the government of India, about Microsoft’s third-party authorized agent (KPMG) to have allegedly ‘barged’ into his Mumbai office, Ratein Infotech, without an appointment to search for pirated versions of Microsoft’s software. Microsoft and KPMG had to apologize following a police complaint from Goenka.

Goenka has also filed a petition in Supreme Court seeking a ban on Microsoft products in India until it is satisfied that there is no violation of the fundamental rights of the privacy of the users. The petition filed by Vinit Goenka through advocates Khushbu Jain and Sriram P seeks prevention of unauthorized collection and use of petitioner’s data by entities like Microsoft.

In a recent interview with CNBC TV18, Khushbu Jain, Counsel of Goenka, alleged that Microsoft has admitted in public domain that it has access to the user’s data/emails stored at various data centers abroad. “This is in gross violation of the right to privacy. We expect the court to direct the competent authority to investigate the extent of data taken away, stored and shared by Microsoft. We also expect a proper legislation to prevent the breach of privacy and until then there must be restrictions on Microsoft over collection and sharing of user data.”

Revenue pressures

While as per market estimates Windows operating systems (including Windows 10 and previous versions) held a global market share of 75.43 percent in February 2018, the India market has a challenging rate of 58 percent unlicensed PC software installation valued at over $2.7 billion in 2015, as per study from Business Software Alliance. The large-scale piracy of software is indeed hurting revenues of the software vendor.

Many partners allege that the spurt in unlawful crackdown may be due to pressure to meet revenues and targets. “Software piracy is hurting revenues of the companies like Microsoft. Further, agents like KPMG have their own targets to meet. They bypass processes and threaten customers to save time and moneyas they don’t want to get into litigations,” claimed President, PACT during a recent conversation.

“Executives from agents like KPMG cut corners to meet their targets and raise revenues,” alleged Alok Gupta, Director, Software Mart. “While Microsoft is quite liberal on the customers, the agents often cross the line by threatening and not following appropriate procedures.”

Partners opined that they must be taken in the loop with prior intimation to the customer before conducting an audit at the premises. “We make sure that our customers use genuine software; however, if any inconsistency arises we are always ready to assist customers and vendors. Prior permission for the visit for auditing will prevent any unnecessary inconvenience to customers and vendors,” shared Shyam Sunder Modi, Director, Modi Infosol.

The big question: Is Microsoft promoting piracy?

Microsoft is aware of piracy and has a whole bunch of written material to warn people of the consequences, both legal and beyond legal. But what stops it from clamping down on piracy?

“Microsoft can very easily identify pirated versions of its software through its telemetry servers. Once identified, it is easy to restrict the functioning of the software remotely. This will also save the company lots of hassle,” suggested Tandon of Questa.

However, many allege that there is a business interest involved. “The company strategically allowed individuals and businesses to use pirated versions to become habitual users of the Windows and Office suite. In addition, the user-friendliness of the software ensures that they will purchase a Microsoft license whenever they want to do so,” shared Prarthana Gupta, Managing Director, Cache Technologies.

Another reason highlighted by few partners is a concerted effort to keep Open Source operating systems out of the market. “Had Microsoft decided to end piracy in 1998, the millions of people would not have grown up with Windows and rather grew up with Ubuntu. In fact, Microsoft’s ecosystem of software would have been much smaller, as a majority of the population would be using Open Source software instead of Windows and Office suite,” detailed an Indore-based partner who doesn’t wish to be named.

Hence, as per many partners, the Microsoft strategy seems to be encouraging piracy (even at the cost of revenue), which could translate into a massive customer base – which may not pay but will be faithful. This will ensure that the coming generations also get used to working on Windows, which in turn guarantees many more years of market leadership.

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