The BSA,Microsoft and the definition of Extortion (Zdnet comment)

Posted Aug 21, 2003 3:33 UTC (Thu) by NZheretic (guest, #409)
Parent article: Rockin' on without Microsoft (News.com)

[Posted to the Zdnet forum in reply to the same article]

Extortion n.
1. The act of extorting; the act or practice of wresting
anything from a person by force, by threats, or by any
undue exercise of power; undue exaction; overcharge.

Some of the tactics used by Microsoft and the Business Software Association (BSA) in the name of the fight against software piracy directly hurt the consumer, Microsoft's competitors and even society in general.

Microsoft has been found guilty of breaching the US antitrust laws by US Court of Appeal, abusing its dominant position in the marketplace to the detriment of its competitors and the consumer.

The Business Software Assocation (BSA), quoting from its webpage, claims to ...
http://www.bsa.org/intnatl/about.phtml

We are the voice of the worlds software, hardware and Internet sectors before governments and with consumers in the international marketplace. BSA members represent the fastest growing industries in the world.
BSA educates computer users on software copyrights and cyber security; advocates public policy that fosters innovation and expands trade opportunities; and fights software piracy.

The BSA includes a few large software and computer companies in its offical memberships.
http://global.bsa.org/intnatl/membercompanies.phtml

Both the BSA and Microsoft are also actively running a worldwide campaign to fight software piracy. It is some of the tactics used in this campaign and the relationship between Microsoft and the BSA management which is being used by Microsoft to reinforce its monopoly. This is hurting the rest of the computer industry including some of the same companies in the BSA membership.

Other tactics, including the targeting ex-employees for informants and the offering of bounties to informants is directly harmful to the employer-employee relationship and society in general.

You or your employer may have received an email or letter from Microsoft or the BSA, or you may have heard the BSA's radio adverts. It's also likely that either of the above may have raised a little concern, even from the most lawful of people. The BSA can even get a court order, sometimes based on the accusation of an individual and with the help of federal marshals enter your home or place of work to gather evidence. The BSA can collects fees of up to $150,000 for every unregistered software program installed on an organizations computers. What if some unlicensed software is installed on the owners computer without their knowledge?

It is not that Microsoft or any other company should not have the right to protect its copyrighted products from "piracy". However the tactics used must also not be abused by Microsoft or the BSA to the detriment of the consumer or society.

There will be those arguing in the BSA's and Microsoft's favor who will try to paint this solely as a pure black and white issue - guilty or not guilty of software piracy and theft. BUT, by the same reasoning Microsoft's own executives should have also face imprisonment for breaching the Sherman Antitrust Act.
http://www.usdoj.gov/atr/foia/divisionmanual/ch2.htm

At the "discretion of the court", the issue of intent on the part of Microsoft's management was taken into consideration . Microsoft was granted the right to negotate it's way out of a criminal antitrust case. In the same way the BSA, Microsoft and the courts should take the issue of intent into consideration when dealing with some particular cases of software "piracy".

Tracking licenses is difficult and even if it does its best, any organization cannot be guaranteed to be 100% correct all the time. Computers are moved, repaired, upgraded, replaced and even cannibalized into other computers. It is not made any easier with one of the requirements of the BSA audits being that, along with valid licenses, you must present purchase documentation to prove ownership. Presenting enough valid licenses to cover all of the copies installed on the computers in the organization used should be sufficient. Although maintaining purchase documentation is necessary for tax purposes, matching documentation to each computer is difficult and time consuming. Should the BSA have the same powers, if not greater, than the IRS?

The larger and more diverse the organization, the more difficult, time consuming and expensive it can be to perform a full audit of the software running on all computers. So when presented with the options of :-
a) Undergoing an audit from the BSA, which might turn up anything installed without the managements knowledge; OR
b) Signing up to the purchase of all new versions of software and a special license.

For the larger organization, the latter option is often the only choice, even when the new license, software and required computer hardware upgrades is far more expensive than the existing setup.

Many organization have already received emails and letters from Microsoft offering the exact same choice. The problem for Microsoft's customers and competitors is that the contracts often either replaces competing software vendors products or locks in the customer to Microsoft's software preventing competition.

This Mojo article shows an example of replacement of Novell's servers, a company who is also a member BSA. The article also explains why many software vendors and customers remain silent on the issue.
http://www.motherjones.com/mother_jones/JF98/burstein.html

This Linuxworld article explains how the new contracts can lockout other vendors.
http://www.linuxworld.com/story/32825.htm

There is an insidious aspect to a citywide, multi-year plan. It locks users into Microsoft products only. While the Enterprise Agreement doesn't specifically prohibit the use of other products, effectively it does. It's logical to assume that if you're paying for MS Exchange for three years why allow a department to consider an alternative. (Microsoft makes hay of this point in a Word-formatted white paper extolling the Enterprise Agreement.)

What Microsoft or the BSA is doing would not necessarily be illegal if Microsoft was not a monopoly, but as the Antitrust division of the US Department Of Justice (DOJ) informs us...
http://www.usdoj.gov/atr/public/guidelines/ipguide.htm#t22

As in other antitrust contexts, however, market power could be illegally acquired or maintained, or, even if lawfully acquired and maintained, would be relevant to the ability of an intellectual property owner to harm competition through unreasonable conduct in connection with such property.

Microsoft has been found in breach of the Sherman act for using similar pressure on OEMs ( Original Equipment Manufactures ), including Compaq and Dell, to select Microsoft's products over competitors. Microsoft settlement with the USDOJ restricts the pressure that Microsoft can bring to bare on major OEMs.

Just as Microsoft was "levering" OEMs to stop installing competing vendors products, Microsoft is using the threat of a BSA audit to "lever" end customers into choosing Microsoft's products over competing vendors. Why should the end customers be subjected to the same tactics?

Worldwide, many of the governmental federal, state and local organizations that your tax dollars pay for have already been "levered" into new long term enterprise license schemes.

Any organization that have already felt pressured to sign up to the new license agreements because of such threats should be given the option at anytime during the contract period, for all or individual groups of computers, to either
a) Continue the contract until it's competition; OR
b) Terminating the contract and renegotiate with Microsoft for a new contract without threat of an audit from the BSA; OR
c) Terminate the contract, removing all the software from the computer and receive a refund from Microsoft in direct proportion to the time remaining on the contract; OR
d) Unbundle and remove selected packages from the computer and receive a refund from Microsoft in direct proportion to both the time remaining on the contract AND the retail cost of the individual package.

For organizations facing threats of audit, now or in the future, a way must be provided to ensure that they can come into compliance without being forced into new license agreements.

Even when being audited by the IRS, you are given an opportunity to pay for a shortfall, plus sometimes a percentage penalty. In the same way, if facing a license audit, an alternative arrangement for some cases of "piracy" might be more equitable to both consumer and vendor.

Where the problem is an excess of installations, any organization or individual should have the option to purchase extra licenses, at the same price at which they purchased the original software, WITHOUT having to be forced into renegotiating the arrangement with the software vendor.

Where the problem is software installed and is in active use, that the organization or individual has never purchased any licenses for, then the vendor should expect to be paid the current market price per each unit installed. PLUS if knowledge and intent by the individuals or management can be proved then by all means a reasonable penalty should be charged.

In both above cases the vendor should also be expected to be reimbursed for the use of that software over the time it was installed, but only in close proportion to the average return on investment ( Inflation + 3% ) .

Per package = Original_Price
+ ( Original_Price * Average_Return_on_Investment
/ 12 * Months_installed )

The certainty of the above scheme would greatly improve the public relations between the customers, BSA and software vendors. Organizations and individuals would also be far less reticent over voluntarily going back to the software vendors and purchase extra licenses, to avoid penalties, without the hassle of negotiation or fear of being targeted for future BSA audits.

Those arguing in the BSA's and Microsoft's favor who try to paint this solely as a pure black and white issue, guilty or not guilty of software piracy and theft, should remember Microsoft's own executives facing imprisonment for breaching the Sherman Antitrust Act.

This is not an excuse for "wholesale" software piracy. Any organization or individual who is knowingly distributing illegal copies of proprietary software to individuals or organizations to be installed outside the original organization, without the vendors consent, should be prosecuted to the full extent of the law.

There is another particular tactic used by the BSA which is directly harmful to the employer-employee relationship and society in general -- the targeting ex-employees for informants and the offering of bounties to informants.

http://www.pcworld.com/news/article/0,aid,54324,00.asp

The group is promoting the program in radio advertisements. In them, Bob Kruger, the group's vice president of enforcement, says the BSA is looking for disgruntled employees to identify possible infringements and turn in their employers.
"Most of the calls come from current or former employees," he says in the radio ad, which is airing in each respective city. It can also be heard on the BSA's Web site.

This is just too open to abuse by disgruntled employees, disgruntled ex-employees and even the disgruntled competition. It is just too easy for an employees or anyone to walk in and install unlicensed software on a few computers and call in an accusation to the BSA. The whole thing creates a climate of fear and is a throwback to the worst excesses of the old soviet regimes.

One simliar scheme, in which Microsoft offered prizes to the employees of OEMs that notified it when corporate customers ordered PCs without its Windows operating systems, was quickly discontinued Microsoft.
http://www.aaxnet.com/news/M010425.html
http://seattlepi.nwsource.com/business/24393_reward24.shtml

But Microsoft spokesman Matt Pilla said the program was "a super-brief pilot program that was admittedly stupid but absolutely didn't share information" with law enforcers. "It was just an opportunity to contact customers to explain the limits of their site licenses."

If it was so stupid for Microsoft to offer just prizes, how much more stupid is it to offer thousands in reward?

If you or your organization have been aversely effected by the threat or an actual audit by the BSA, please do not remain silent. If you wish to remain anonymous, seek out public forums that allow you to post anonymously and tell your story.

Under the current situation, Microsoft is still able to dictate terms to all but it's most largest customers. If you wish to avoid such threats in your future you should also consider making the shift to other vendors that offer more lenient licensing terms than that of Microsoft.