Software Piracy Losses Jump to $59 Billion in 2010, Report Says

The value of pirated software worldwide rose 14 percent to $58.8 billion last year, almost double the total in 2003, amid rising theft of programs in emerging markets, according to a trade group that tracks piracy.

Countries with emerging economies, including China, Russia, India and Brazil, now account for more than half of the money lost to piracy, according to the Business Software Alliance, a Washington group that is releasing its annual piracy report today. The U.S. topped all other countries with $9.52 billion lost to piracy, with China second at $7.78 billion.

Still, only 20 percent of software in the U.S. is stolen, tying for the lowest rate with Japan and Luxembourg. In China, almost four out of five programs in use are pirated, and 65 percent of software in Russia is stolen. Piracy represents a problem for companies such as Microsoft Corp. (MSFT), the biggest software maker, because personal-computer sales growth is fastest in countries that have high rates of software theft.

“Software piracy is truly out of control in the world’s fastest-growing economies,” Robert Holleyman, chief executive officer of the Business Software Alliance, said in an interview yesterday. “When you see $59 billion worth of products were stolen last year it equates to being robbed blind. Piracy is the bane of our industry’s existence.”

The bulk of piracy takes place among business customers, Holleyman said, meaning some companies in emerging markets are able to avoid costs that rivals in low-piracy countries like the U.S. and Japan face.

China’s Piracy Rate

The percentage of software in China that is pirated dropped to 78 percent last year from 79 percent in 2009, according to the report. In 2003 it was 92 percent, though the overall value of stolen software has increased as the Chinese software market expands, the report said.

Stolen software in Russia amounted to $2.84 billion, while India accounted for $2.74 billion of the total. Though it has a lower percentage of piracy, the U.S. still racks up the largest losses in dollars because it is the biggest software market, Holleyman said.

Georgia leads the list of countries with the highest percentage of pirated software, with 93 percent, following by Zimbabwe at 91 percent. Yemen, Bangladesh and Moldova came in at 90 percent.

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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