Microsoft Said to Ask China to Stop Piracy at Four Firms

Microsoft Corp. (MSFT) asked China to stop the alleged use of pirated versions of its Office software by China National Petroleum Corp. and three other state-owned companies, three people familiar with the situation said.

The world’s biggest software company filed its complaint against CNPC, China Post Group, China Railway Construction Corp. and Travelsky Technology Ltd. (696) last month to a government panel led by Vice Premier Wang Qishan, said the three people, who asked not to be identified because the filing isn’t public. Microsoft alleged that more than 40 percent of Office and Windows server client software used by CNPC, parent of China’s largest company by value, is unlicensed, the people said.

Microsoft spokesman Charles Shen said he didn’t immediately have any information on the filing. Liu Weijiang, a Beijing- based spokesman at CNPC, said the company hadn’t heard about Microsoft’s complaints. Liu declined to comment on whether CNPC used pirated versions of the Office software.

Xu Zhaohui, who is in charge of hardware and software for China Post, said Microsoft’s allegations were “inaccurate.” The company, which delivers mail, received a complaint from Microsoft within the past month and has sent a written response, Xu said by telephone yesterday.

Piracy Rates

Microsoft alleges that 84 percent of China Railway Construction’s Office software is unlicensed along with 97 percent of its Windows server client software, according to the complaint, the people said.

Those estimates “greatly exaggerated” the use of unlicensed software by China Railway Construction, the company said in an e-mailed response supplied by Kevin Mao, an outside public relations representative for the listed unit.

“We do not rule out the possibility some subsidiary units may have used unauthorized software, but it certainly is not such a large proportion,” China Railway Construction said in the statement. “The company attaches great importance to this matter, and we are holding an internal inquiry.”

Calls to the Travelsky headquarters number listed on its website weren’t answered.

Microsoft Chief Executive Officer Steve Ballmer met Wang in Beijing in May, and the vice premier pledged to crack down on software piracy, the official Xinhua News Agency reported at the time. In a speech at Peking University during the trip, Ballmer said intellectual property protection in China is “weak,” making it hard to sell legitimate software.

Photographer: SeongJoon Cho/Bloomberg

In a speech at Peking University, Microsoft Chief Executive Officer Steve Ballmer said intellectual property protection in China is “weak,” making it hard to sell legitimate software. Close

In a speech at Peking University, Microsoft Chief Executive Officer Steve Ballmer said... Read More

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Photographer: SeongJoon Cho/Bloomberg

In a speech at Peking University, Microsoft Chief Executive Officer Steve Ballmer said intellectual property protection in China is “weak,” making it hard to sell legitimate software.

$9 Billion Market

China’s illegal software market was worth almost $9 billion last year, compared with a legal market of less than $3 billion, according to the annual report of the Business Software Alliance released in May.

In its complaint, Microsoft also alleges that almost all of Travelsky’s Office software is unlicensed, with 93 percent of China Post’s coming from pirated versions, the people said.

For Windows server client software, the Redmond, Washington-based company alleged that almost 100 percent of China Post’s and 87 percent of Travelsky’s applications were unlicensed, they said.

The allegations were based on Microsoft’s own estimates and calculations, the people said.

China agreed during December 2010 meetings with U.S. officials in Washington to take steps to counter losses from piracy for software companies. Wang, who led that Chinese delegation, was named head of a panel created in November 2011 with responsibility for ensuring the protection of intellectual- property rights.

To contact Bloomberg News staff for this story: Steven Yang in Beijing at kyang74@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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