International Law

Microsoft Plays the Piracy Card

By Stan

Not a lot of news today, aside from the mega-acquisition announced by Coca-Cola of a Chinese juice company. Exciting, but not much to talk about, for me at least.

On the other hand, we have Microsoft, which is an early target of China’s new Anti-monopoly law, potentially using software piracy as a defense. This is kinda fun, if you’re a lawyer:

Microsoft may have a viable legal defence against its first ever anti-monopoly claim in China, given the prevalence of pirated Microsoft products in the country and how “market share” is defined by the Chinese authorities.

When lawyer Dong Zhengwei, a partner with Beijing-based Zhongyin law firm grabbed the headlines by alleging that Microsoft was using its dominant market share to manipulate software prices in China and calling for a US$1bn fine to be imposed on the global software giant, Microsoft global VP Zhang Yaqin was quick to reply with an interesting counter argument: “Microsoft did not even have the preconditions of conducting monopoly activities in China,” he said “genuine Microsoft products have a very low market share in China because its products are widely pirated.”

Nifty, eh? The argument does make some sense. The allegation is that Microsoft has abused its dominant position in the market to charge higher prices. If, due to high piracy rates (Microsoft and the Business Software Alliance say 82%), Microsoft can claim that they do not, in fact, have a dominant market position, then there is no leverage there to control pricing.

Interesting, and logical. The ultimate decision here will of course be much more complicated. A lot will be riding on how this new law is interpreted, how Microsoft’s market is defined, and what sort of evidence will be taken into account

Full post as published by China Hearsay on September 03, 2008 (boomark / email).