M$ Fights Piracy In China, Linux Wins

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On virtually any street in Shanghai or Beijing, you can buy a Hollywood DVD or hot new CD for $1 or less. Vendors peddle Microsoft Office, Windows XP, and every other popular software applications out of cardboard boxes jammed full of discs. Entire markets in the major cities are dedicated to selling knock-offs of designer goods for pennies on the dollar. If you're interested in high finance, $200,000 worth of annual derivatives data is available from online vendors for $500 a year.

According to Jones Day intellectual property rights lawyer Xiang Wang, the Chinese case law on many aspects of intellectual property rights is not yet well developed, and cases can take years to settle. The Business Software Alliance—a trade group including software giants such as Microsoft, Apple, and IBM—alleges that 90 percent of all software used in China is pirated and that software vendors suffered $3.5 billion in losses last year due to Chinese piracy.

The Chinese government has started to realize that this is an obstacle to economic development. And if anybody pays attention to economic development these days, it's China. Now, China is beginning to look at open source software as a way out of the intellectual property quagmire that doesn't involve paying high costs.

Linux is a keystone in this strategy.

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