Of China, Piracy and Open Source

A few months ago, I spent quite a few words disembowelling a BSA report on piracy that made some highly-simplistic assumptions and calculations about the alleged impact of pirated software on economies around the world. This was the report's...


A few months ago, I spent quite a few words disembowelling a BSA report on piracy that made some highly-simplistic assumptions and calculations about the alleged impact of pirated software on economies around the world. This was the report's main thesis:

the impact of software piracy goes beyond revenues lost to the software industry, starving local software distributors and service providers of spending that creates jobs and generates much-needed tax revenues for governments around the world.

As I discussed, that's not true:

Reducing software piracy will not magically conjure up those hundreds of billions of dollars of economic growth that the BSA invokes, or create huge numbers of new jobs: it will simply move the money around – in fact, it will send more of it outside local economies to the US, and reduce the local employment.

By some mischance, one of the leader writers on the Italian daily Corriere della Sera seems not to have read that particular post (can't imagine how he overlooked it). As a result, he wrote a misguided leader entitled "If Beijing Buys Everything", (kindly pointed out to me by Carlo Piana) containing the following paragraph, whose logic is remarkably similar to that of the BSA:

Il surplus cinese (oltre 200 miliardi di euro) è in gran parte il riflesso della pirateria informatica. Il valore delle esportazioni supera quello delle importazioni anche perché i cinesi copiano la maggior parte del software che usano. Se acquistassero le licenze, il saldo sarebbe molto più vicino al pareggio.

[The Chinese surplus (more than 200 billion Euros) is largely a reflection of software piracy. The value of exports exceeds that of imports also because the Chinese copy the majority of the software that they use. If they acquired licences, the accounts would be more nearly balanced.]

That's an extraordinary idea – and complete nonsense.

It's based on the fallacious assumption that if the Chinese stopped using pirated software, they would simply pay for everything, which would generate this huge figure quoted above. That's wrong for several reasons.

As news stories prove every day, China is more than capable of creating technology that matches that of the West – think of maglev trains or stealth fighters. It could easily knock up its own operating system and applications to replace the proprietary ones that are pirated across the land. But in fact it doesn't even need to go to all that trouble.

For some years, the China government has been quietly supporting and promoting the use of free software within its borders – conscious, no doubt, that it forms a handy insurance policy against the day when it might not want to be so dependent on Western proprietary products.

This move has had another very important side-effect: it has put pressure on Microsoft to acquiesce in the large-scale use of pirated copies of its software, as this interview with Bill Gates from three years ago reveals:

Today Gates openly concedes that tolerating piracy turned out to be Microsoft's best long-term strategy. That's why Windows is used on an estimated 90% of China's 120 million PCs. "It's easier for our software to compete with Linux when there's piracy than when there's not," Gates says. "Are you kidding? You can get the real thing, and you get the same price." Indeed, in China's back alleys, Linux often costs more than Windows because it requires more disks. And Microsoft's own prices have dropped so low it now sells a $3 package of Windows and Office to students.

That $3 price is another reason why the 200 billion Euros quoted in the Corriere della Sera editorial is pure fantasy: even if more people bought Microsoft's products, they wouldn't be at anywhere near official list prices, so the revenue would be relatively low, despite the huge size of the market.

It's sad to see a serious newspaper like the Corriere della Sera spouting the kind of unrealistic nonsense; it bolsters the erroneous view that software piracy is a serious problem around the world, and that vast sums of money are involved. When you look closely at the details, neither turns out to be true. The real sums involved in developing countries are relatively small, and in any case, as Gates himself admits, companies like Microsoft actually prefer piracy to the alternative: a world running on open source.

If Corriere della Sera is so worried about the West losing its technological edge, rather than indulging in hyperbolic and unjustified scaremongering about software piracy, it would do better to run a few quiet editorials promoting the creation and deployment of free software in Italy and elsewhere...

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