Raids and arrests in China over the past two weeks mark the culmination of a multiyear investigation into a major software counterfeiting syndicate based in the southern China province of Guangdong. The syndicate is allegedly responsible for manufacturing and distributing more than $2 billion worth of counterfeit Microsoft^® software. The investigation into this syndicate, which is believed to be the largest of its kind in the world, was led by the FBI and China’s Public Security Bureau (PSB). Microsoft Corp., hundreds of Microsoft customers and scores of Microsoft partners also assisted in the investigation.

“Microsoft deeply appreciates the work of China’s Public Security Bureau in taking such strong enforcement action with these arrests and raids in Southern China,” said Brad Smith, senior vice president and general counsel at Microsoft. “This case represents a milestone in the fight against software piracy — governments, law enforcement agencies and private companies working together with customers and software resellers to break up a massive international counterfeiting ring. This case should serve as a wake-up call to counterfeiters. Customers around the world are turning you in, governments and law enforcement have had enough, and private companies will act decisively to protect intellectual property.”

Customers and Resellers Report on Syndicate

Microsoft customers and software resellers played a major role in ultimately helping the FBI and the PSB identify and build the case against the China-based counterfeiting syndicate. Tens of thousands of customers used Microsoft’s anti-piracy technology in Windows Genuine Advantage to identify the software they were using as fake. More than 1,000 of these customers then submitted physical copies of counterfeit Windows XP for analysis, which Microsoft was then able to forensically link to the counterfeit syndicate. In addition, more than 100 Microsoft resellers played a key part in helping to trace the counterfeit software and provided physical evidence critical to building the case, such as e-mail messages, invoices and payment slips. Source – MS Press Release

Globally, counterfeiting robs the software industry of an estimated $40 billion (U.S.) per year. Lost industry revenue is just the beginning; the fourth annual BSA and IDC global software piracy study (May 2007) estimated worldwide piracy rates at 35 percent in 2006. According to the study, reducing this rate by just 10 percent over four years could potentially generate 2.4 million new jobs, $400 billion in economic growth and $67 billion in additional tax revenue for the world economy. In the last 18 months alone, worldwide law enforcement agencies have seized more than 914,177 units of counterfeit Microsoft software.

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