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Don Grantham (Europe) - Stamping out Piracy, a Mandate for Change

Despite the daily news on the economic woes of European countries like Greece and Hungary, Central and Eastern Europe continues to have appeal for foreign investors.  When we look at the great potential of these markets, however, there is one shadow on the horizon – software piracy.  According to the 2010 BSA global software piracy study, countries in CEE have some of the highest rates of piracy and consequently, are amongst the most heavily impacted by the knock-on effects.


Ultimately, growing markets seek to build up their own economies locally and also through attracting foreign investment, a crucial rationale for using technology as a means to transform both a country and a region. Often unencumbered by outdated infrastructure, CEE markets adopting new technologies can help fast-track their economic growth and national competitiveness in the broader European context. Younger, emerging markets in CEE can use technology to improve public systems such as education and healthcare and build healthier national economies, which contributes significantly towards helping manage economic turbulence.


Piracy presents a serious challenge because it puts this progress in jeopardy. A flourishing counterfeit software market inhibits rather than stimulates long-term economic growth. The CEE region has, according to BSA, an average piracy rate of 64%; in some individual countries it’s even higher - for example, Azerbaijan currently stands at 88%. Piracy tends to be highest in less mature software markets as local suppliers try to capitalize on tight budgets and demand cycles that spike before genuine products become available.


And we can quantify the impact. A 2009 report produced by IDC and BSA estimated that reducing the software piracy rate in Czech Republic by ten percentage points over four years would deliver $478 million in new economic activity, $116 million in additional tax revenues and a wealth of new IT jobs by 2013.  That’s astonishing.  It’s even more compelling when you consider that the 2010 piracy rate at 36% in Czech Republic is actually the lowest in CEE, and significantly below the global average at 42%.  Imagine then what reducing piracy could do for Azerbaijan, or Georgia (93%), or Ukraine (86%). Statistics like this should encourage governments, businesses, technology providers and individual citizens across the region to take immediate steps to combat piracy. 


So what can be done? Building and reinforcing public and private partnerships locally is the foundation to ensuring that communities are served appropriately. To promote technology responsibly, it’s critical to engage local governments and relevant stakeholders to emphasize the huge potential value in software.  An example of this is the formal legalization agreement we recently signed with the Government of Azerbaijan to guarantee the use of legally licensed software in government offices, a very positive step forward.

Recognising the detrimental effects of piracy, regional governments are also taking proactive measures themselves to curb it. Since January, the Greek Tax Police (SDOE) has been performing a series of software audits at commercial entities – both end user and reseller companies. To lend added strength to enforcement efforts led by governments around CEE, Microsoft is, in cooperation with other local BSA members, developing various anti-piracy activities to raise awareness around the problem. Our goal is to take strong action against unfair competition in the interest of our channel partners, who are strictly playing by the rules, and unwitting consumers, who are too often fooled by illegal offers and need more protection.


More and more CEE governments are successfully implementing these anti-piracy measures. Russia has measured the fastest decrease in piracy in the world, down from 87% in 2004 to 65% in 2010. There is a great deal of energy and potential for growth in Central and Eastern Europe and I am seeing the signs that establishing a genuine software economy is moving up the agenda of governments all across the region in order to make this a reality.


Don Grantham is Area President for Microsoft in Central and Eastern Europe.

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