Ballmer to Hu: 90% of Microsoft customers in China using pirated software

Microsoft CEO raises concerns to Chinese president about intellectual property protection

While Chinese President Hu Jintao knew he'd face some tough questions when he came to the United States this week, he probably figured most of them would come from Barack Obama and members of Congress. But you can add Microsoft CEO Steve Ballmer to that list.

Ballmer used Hu's official visit as an opportunity to point out that 90% of Microsoft software users in China didn't pay for it. The comments were part of a discussion about intellectual property protection.

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Ballmer's exact quotes were not released, but President Obama discussed Ballmer's concerns during a press conference.

According to a White House transcript, Obama said:

"We're making progress on making sure that the government procurement process in China is open and fair to American businesses. And we've made progress as a consequence of this state visit.

"Some of it has to do with intellectual property protection. So we were just in a meeting with business leaders, and Steve Ballmer of Microsoft pointed out that their estimate is that only 1 customer in every 10 of their products is actually paying for it in China. And so can we get better enforcement, since that is an area where America excels -- intellectual property and high-value added products and services."

Pirated copies of Windows and other Microsoft products are a financial threat the company fights on a regular basis, and as Ballmer's comments point out, the rate of software piracy is particularly high in China. One consequence of people using pirated software is that they fail to update their software to newer, safer versions. This perhaps explains why nearly half of Chinese Internet users still use the 10-year-old Internet Explorer 6, rather than more modern browsers. 

A Microsoft spokesperson did not answer questions about how the company calculated the software piracy statistics, but pointed to a brief blog post published Wednesday on Microsoft's Technet site. The post says that "Microsoft CEO Steve Ballmer today joined a number of U.S. and Chinese business leaders for a meeting at the White House with President Barack Obama and Chinese President Hu Jintao. At the meeting, Ballmer highlighted the importance of intellectual property, or IP, to the future success and economic development of both countries, and noted the serious IP piracy problems that currently exist in China."

Obama didn't detail any specific measures the U.S. and China would take to help Microsoft and other vendors fighting software piracy. "The Chinese government has, to its credit, taken steps to better enforce intellectual property," Obama said. "We've got further agreement as a consequence of this state visit. And I think President Hu would acknowledge that more needs to be done."

Microsoft has long jealously guarded its patent portfolio, which is expanding all the time. Microsoft earned more than 3,000 new U.S. patents in 2010, behind only IBM and Samsung.

Follow Jon Brodkin on Twitter: www.twitter.com/jbrodkin

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