Microsoft and Consumers Take Action Against Global Software Piracy

Initiatives to protect consumers launched in more than 70 countries on Consumer Action Day.

REDMOND, Washington, December 3 - Microsoft Corp. today announced a surge of voluntary reports - more than
150,000 in the past two years - from people who unknowingly purchased
counterfeit software that was often riddled with viruses or malware. This
increase, more than double the amount of previous records, reflects growing
concern for the harm caused by counterfeit software and Microsoft's efforts
to give people a voice in the fight against software counterfeiting.

(Logo: www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO)

In addition, Microsoft today announced a surge of its own with Consumer
Action Day, a simultaneous launch of education initiatives and enforcement
actions in more than 70 countries to help protect consumers and increase
awareness of the risks of counterfeit software.

"Consumers want action. The majority of our enforcement cases announced
today resulted from tips and reports from consumers," said David Finn,
associate general counsel for Worldwide Anti-Piracy and Anti-Counterfeiting
at Microsoft. "Consumers who are duped by fraudulent software encounter
viruses, lose personal information, risk having their identities stolen, and
waste valuable time and money. Today's announcement demonstrates our
commitment to working with others, including our partners, government
agencies and nongovernmental organizations, to protect people from the ill
effects of counterfeit software."

The software industry has long studied the black market for pirated
software and its effects on consumers. One seminal study by IDC in 2006(1)
showed that one in four Web sites offering counterfeit software attempted to
install unwanted or malicious code upon downloading. This rate is rising, as
found by Media Surveillance, an anti-piracy solutions company based in
Germany, when it recently downloaded several hundred pirated copies of
Windows and hacks and found that 32 percent contained malicious code. The
2006 IDC white paper also described a review of counterfeit Microsoft
software purchased at resellers in 17 countries: more than 50 percent of the
discs contained phony code, had malware or could not even be installed. Just
two months ago, the BSA October 2009 Internet Piracy Study(2) showed
countries with high piracy rates often have high malware infection rates.

"The product we received looked like Microsoft software, but when we
tried to install it, we had problems almost immediately," said Bill Kyne,
chief executive officer of 5 Star Financial Services. "We had installation
errors and registration errors, right from the start. Both my wife and I have
home-based businesses, and we rely heavily on our computers. We were both
down a significant amount of time when the pirated software wouldn't run
properly."

As part of Consumer Action Day, more than 70 countries are launching
educational initiatives and enforcement actions to help protect consumers
from counterfeit software. Highlights include an intellectual property rights
education program in schools across China, an originals club for software
resellers in Germany, a risk-of-counterfeit training course for the consumer
protection authority in Mexico, a children's online safety program in Greece,
and a study of piracy's impact on small and midsize businesses in Argentina.
An interactive map detailing these efforts around the world today can be
found at www.howtotell.com.

The effects of malware can range from annoying advertisements to a severe
breach of information security. A recent study by Harrison Group Inc.(3)
found that companies using unlicensed or counterfeit software were 73 percent
more likely to experience the loss or damage of sensitive data, and 73
percent more likely to have critical computer failures lasting 24 hours or
more.

Moreover, most people simply find themselves without the software they
thought they were paying for. Unable to get a refund from the dealer, some
consumers find they need to purchase the product again. Canadian
small-business owner Shawn Pelling of Pelling Industries Ltd., said he
purchased Microsoft Office software through a vendor he'd not used before.

"I was looking for software for my business and wanted to save us some
money," Pelling said. "After a few weeks of using the software, it turned out
that we had been sold a high-quality counterfeit package. I appreciate
Microsoft stepping up and helping address this issue."

Worse yet, today's counterfeiters are often large criminal syndicates
that don't stop at distributing hundreds of copies of unlicensed software.
"Software pirates are likely to create botnets, which are armies of
compromised computers controlled by cyber-criminals and used to perform a
host of illegal Internet activities," said Markus Schweitzer of Media
Surveillance. In just one recent example, software pirates helped create a
botnet army by offering a counterfeit version of Windows, rife with malicious
code, which compromised PCs and then ordered them to connect to a server
controlled by cyber-criminals.

To address the increasing sophistication of software counterfeiters,
Microsoft is enhancing its anti-piracy work on all three fronts: education,
engineering and enforcement. Today's actions around the world emphasize the
company's growing commitment to protect consumers. Tips from customers and
partners are vital in helping Microsoft address piracy. Microsoft encourages
anyone who receives suspicious software to call the company's anti-piracy
hotline at (800) RU-LEGIT (785-3448) or look for more information online at
www.howtotell.com.

On the engineering front, Microsoft has improved the product activation
and validation process with Windows 7. Windows Activation Technologies in
Windows 7 are built off the Software Protection Platform introduced with
Windows Vista, which enables Windows to protect itself by detecting when
attempts have been made to circumvent or tamper with built-in product
activation technology, and helps customers more easily activate the product
and resolve potential issues. Windows 7 includes the latest generation of
this technology, including changes that allow users to see more informative
notification messages and to more easily complete the steps in the process.

When it comes to enforcement, Microsoft has invested in nine Product
Identification (PID) Analysis Labs around the world. Forensic experts in
these labs use sophisticated tools, such as digital disc fingerprinting and
optical manufacturing tracking, to examine counterfeit software and provide
critical information to local law enforcement agencies to use in their
pursuit of criminal software counterfeiting syndicates. The results are
tangible and impactful: Microsoft's work in its PID Analysis Labs has led to
more than 1,000 customs border patrol seizures of counterfeit software in
just over two years.

"The global problem of counterfeit software calls for an international
response and a strategy that targets sophisticated crime syndicates taking
advantage of unwary consumers," said Kunio Mikuriya, secretary general of the
World Customs Organization. "Through vigilance and active feedback to public
institutions and companies like Microsoft, consumers and businesses will be
instrumental in overcoming this problem. The serious economic consequences
generated by this illicit trade make it imperative that we urgently pool our
efforts, strengths and expertise to fight this crime."

About Microsoft

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in
software, services and solutions that help people and businesses realize
their full potential.

(1) The Risks of Obtaining and Using Pirated Software, IDC white paper
sponsored by Microsoft, Doc # WP1006GRO, October 2006

(2) IDC study sponsored by BSA, 08 Piracy Study, May 2009

(3) Impact of Unlicensed Software on Mid-Market Companies, Harrison
Group, September 2008

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