Microsoft raids the penny jar of small business with piracy allegations?

After being rather flippant in my opinion about piracy, why is Microsoft raiding the penny jars of small business now? Could it be they are not doing as well as they claim and they need the cash?

There will be a few readers (like myself) who have been around a while.  We remember when arcades were 10p a go, we marveled at the ZX81 and its computing prowess and unlike many of the Microsoft Faithful (who’s first memory of computing was the Playstation) we also remember a very important comment Bill Gates said quite a while ago:

Although about 3 million computers get sold every year in China, but people don’t pay for the software,” he said. “Someday they will, though. As long as they are going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.

To me, the reasoning behind that was obvious, let people have it for free and once it saturates the market (and people can no longer envisage a computing life without it) cash in on the pirates.

Its being reported that Microsoft is now doing some cashing in over on the UK’s green and pleasant land.  Hitting vendors who allegedly have been selling unlicensed copies of Windows.

Included in this list are the following computer shops (and this list can be found here):

Computer Services Repair, Birmingham
Marsh Computers High Tech Trading Ltd, Kent
B’N’I Computers Ltd, Birmingham
Morely Computers, Leeds
Discovery Computers, Birmingham
South Liverpool PC Repair, Leeds
Gemini Computers, Birmingham
Smithdown Computers, Liverpool
Bytesize Solutions Ltd, Birmingham
TC Links, Liverpool
Discount Computer Warehouse, Birmingham
SXC Industries Ltd t/a Stockxchange, Liverpool
Computer Resale, Chesterfield
Avesta UK Ltd, Manchester
Quest Computers, Gosport
KBR Computers, Merseyside
Surf-IT Computers Ltd, Hampshire
Jupiter IT, Merseyside
Exel Computers, Sheffield
Clarion Computers, Swansea
MCS Computers, Teesside

and Microsoft didn’t stop there, since they also tackled ebay too:

Little Laptop Shop eBay aka recovery_dvds
Custom PC Shop
Fizz Time aka Electricbuy
Snowdon Computers Ltd

Michala Wardell the head of Microsoft’s piracy department, had this to say:

Most of those caught in the operation either claimed the illegal activities were carried out by rogue employees or that they were not aware that what they were doing was illegal

Now these vendors are apparently “working with Microsoft” [1] and everything is ok?  Well no, not in my opinion.  For years after the original comment Bill Gates made, it seemed that Microsoft was not particularly bothered with piracy.  Sales were good and even recently Steve Ballmer made the remark (in reference to unlicensed Windows):

….that’s a competitor that’s tough to beat, they’ve got a good price and a heck of a product, but we’re working on it.

which suggests to me that Microsoft was rather happy that the market was saturated with their products, legal or not.  (You can read that quote in context here)

The prophecy that Bill Gates made though now seems to be coming to pass and one has to wonder, if Windows 7 and their associated wares are selling as well as Microsoft claims they are, why are they going after these vendors now and not years ago? – I’ll let you work that one out, but going after a few vendors in the UK hardly gives credibility to the successes in sales that Microsoft has touted recently.

Lets also consider that here you have vendors “named and shamed”, without trial by Microsoft.  I am sure they all volunteered to be named by Microsoft, but I wonder what if they hadn’t?  I wonder what sort of “agreement” Microsoft offered them, or indeed what they said they would do, if they didn’t agree.  I would like to think that Im not the only one who is a little uncomfortable about a firm handling these matters itself, what would you do if you owned a small business when Microsoft employee’s came knocking? Refuse to co-operate?  I think for a small business being eyed up by Microsoft, its not trading standards they would worry about.

Michala Wardell  has a beaming smile and a rather disturbing (imo) way of putting Microsoft’s actions against alleged piracy:

At Microsoft, we recognise the impact the sales of pirated or unlawful software have on the channel. To continue the fight against those who sell unlawfully, we will continue our efforts to invest heavily in education, engineering and enforcement initiatives to combat software piracy to cleanse the channel of illegal software trade.

The highlighted text is mine, this quotes source is here.

Of course that seems to be in stark contrast to the flippant way Ballmer dismissed piracy, or indeed Bill Gates own words which to me seemed to encourage it.  Lets look though at an allegation against Microsoft of “theft of IP” (of sorts) and consider what our anti-MICROSOFT-piracy crusader would say to the allegations against Microsoft when the creators of Juku accused Microsoft of stealing code from their project and using it themselves for the Plurk project? The following was reported on ars technica on 15th December 2009:

a Twitter-like social networking site that has gotten quite popular in China, accused Microsoft China of not only stealing the service’s design, but 80 percent of the service’s code too. In response, Microsoft has pulled its microblogging site, which goes by the name of Juku

and whilst Microsoft appeared to blame a third-party, it is also claimed in the allegations against the small businesses that some offered the defense of “rogue employee’s”  – of course Microsoft has a war chest of cash to both defend and attack…so that’s ok then.

If your Falcon has an unlicensed copy of Windows can you expect Microsoft to come running?....Is Microsoft really chasing the pennies now?


As regular readers know, I have a strong anti-piracy viewpoint, the problem I have in this instance is that I would put money on the “working with Microsoft” by the above named businesses very similar to the “behind closed-door deals” that Microsoft has engaged in recently with regards to patent violations.  Theres a reason why Microsoft don’t want you knowing, I wonder why?

In addition I think the way that Bill Gates seemed to dismiss (or even encourage) piracy, only for Microsoft to collect later is rather underhanded.  If the plan was to let people get “hooked” and then cash in once they had saturated the market, then I’d say they have succeeded.  What Microsoft didn’t plan for all those years ago when Billy Gates made his statement was that people would be switching to alternatives and we need to ask ourselves, why now? Could it be that after so many failed projects/products that Microsoft is needing money now more than ever? certainly Dr Schestowitz has written articles on failing products and cash cows here and could it be that Microsoft has now seen the drifting away of its customers and trying its best to recoup losses just to continue its existence?

I would also like to know why Microsoft didn’t involve Trading Standards immediately? Why do they want to deal with it in-house? What sort of deal/agreement have these small businesses actually made in order to “work with” [1] Microsoft?

I will be contacting some of the businesses on that list for a comment, Ive got money on them not being allowed to respond.


[1] In my view, working with Microsoft is more like working for Microsoft.  You do it their way or not at all.

Goblin –

If you are new to this blog (or have not yet read it) please take time to view the OpenBytes statement, here.


14 thoughts on “Microsoft raids the penny jar of small business with piracy allegations?

Add yours

  1. Goblin get yourself on I binned Twitter and want to hear your input. I do appear to be subscribed to you on but deafened by sound of silence.

  2. It is my understanding that all the firms mentioned agreed, as part of the terms and conditions of the settlement reached, to be named in any press material that Microsoft deigned to release on the topic. However, I believe, they were also told that they would have a right to reply against any allegations made against them as a result of any press release being issued, but (aside from the ones quoted in the release) none of them were notified by Microsoft that it was going public with their names this week. 😦

  3. I’ve been around awhile too. My first computer being a TI-99/4a. I suppose I could be considered a Microsoft faithful customer. I like some of their products much better than the alternatives. If I couldn’t use Windows I’d end up settling for a Mac.

    I doubt Microsoft’s strategy in China was to let them have Windows for free, rather Microsoft knew they couldn’t stop people from pirating the software anyway. It’s just a normal part of the culture where life isn’t as wealthy and comfortable as Western nations. It was better to dismiss the problem at the time than waste money fighting it to any great length.

    Even without Microsoft’s intervention, things are slowly changing. My last computer purchase here in Beijing was a Chinese brand (Tongfang PC) and came with a legal copy of Windows 7, complete with sticker. You can still find pirated copies in the same store, but it’s not hard to find legitimate products anymore. I can’t say the same for other, smaller cities where it’s near impossible to find decent toilet paper that doesn’t rip to shreds when you try to tear off a square. No joke.

    The shops busted on the list decided to cut corners to make a profit and got burned. End of story. No company should ever sell a computer with pirated software, but it happens. I even worked for one in the past. Microsoft can’t be expected to go after ever single solitary instance of piracy, but it’s only normal for them to sometimes crackdown on the distribution of pirated products. I found your Star Wars picture fitting as it helps present FOSS vs Microsoft as some kind of epic fantasy battle.

  4. Fair points you make, I think what sits uncomfortably with me is the “get them hooked” comment which implies an endorsement until such a time that the product is saturation the market, then collect.

    Ballmer also seemed quite flippant about piracy seemingly contradicting MS action in the UK.

    I don’t see any battle between foss and Microsoft since there are just as many foss projects written for the Windows platform and if you are meaning Linux, then this article had nothing to do with it. The picture for me represents the massive Microsoft going after the little guy for a few pennies, with allegations of illegal copies of Microsoft products. As you will see in the followup, I have been contacted by some on the list and given reference to some things which whilst make the picture a little clearer, throw up further questions.

    Companies “working with Microsoft” ? we will look more closely at that unique concept in the followup and the experiences of the companies that Microsoft are alleged to be.

  5. Thank god I don’t use Windows any more. I had a friend who’s computer died. They bought a new ‘white box’ and installed their ‘purchased copy’ of Windows 7 Professional (this person is a gamer). Of course it told him it was pirated, and that he needed to buy another copy…

    He asked my help, so I went over, and tried the online activation, which didn’t work. I finally picked up the phone and called Microsoft, and finally got it activated. A one hour waste of time, that a Linux/BSD user or a Mac OSX user wouldn’t have had to worry about.

  6. imho; microsoft thought it was ready to use a “big stick” approach in collecting fees, but didn’t count on the readiness of people willing to migrate to F/OSS nor the quality of the applications.

  7. I know some of what happened with the eBay vendors. Rather than report the alleged infringement of Micro$oft’s copyrights to eBay, some shonky spiv in Swindon bought a computer from each vendor, then shipped them to the Micro$oft enforcement department. The next thing they know is that a lawyer is demanding thousands of pounds from them in damages, and just before Christmas. Yes, Ebenezer Scrooge is not dead – he’s alive, well, unreformed and working for Micro$oft!

    And what had those small businesses done that was so terrible? Had they sold multiple, cloned copies of Micro$oft software, thereby stealing money from the unpaid programmers and effectively stealing bread from the mouths of the programmers’ starving bairns?

    No. They had sold computers with an operating system already installed on the hard drive without deigning to pay Micro$oft a further licence fee.

    And now, they’re selling PCs with Linux installed instead of Micro$oft Windoze.

    1. Thanks very much for all the feedback! Culex, I’ll draw reference to your post in the follow up article which is taking far longer than expected!

      Thanks all!

      Best Regards
      Goblin (Tim)

    2. Interesting so do you think The Shaftesbury Centre, Percy Street, Swindon, Wiltshire, SN2 2AZ is a Microsoft office and Peter Turner who works there is a MS Employee? ;o)

  8. Heads up everyone. Just been contacted by a small trader who has received a
    £2500 fine from Microsoft for selling a ‘test purchaser’ a machine with a
    licenced operating system but no original recovery media. He saw I got done
    for the same thing in 2009 (when my company name was Snowdon Computers Ltd) and got in touch to ask for advice etc.

    Looks like the scum are doing the rounds again.

    1. Are you able to put me in touch? It would make a very interesting article for the audiocast.

      Kind regards

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