Microsoft identifies 13 Shanghai PC resellers involved in Windows piracy

Microsoft could take legal action against the resellers if a settlement isn't reached

Microsoft has identified 13 PC resellers based in Shanghai that it claims have been distributing counterfeit versions of its Windows OS, and the company could take legal action against them if a settlement isn't reached.

Microsoft made the announcement on Tuesday as part of its latest anti-piracy campaign in China. The 13 resellers deal in PC brands including Acer, Asus, Dell, HP and Lenovo, Microsoft said in a statement.

"We have reached out to them to discuss a solution to their infringement activity. We reserve the right to take further legal action against them if settlement cannot be reached," the company added in an email.

Microsoft took similar action in December against 16 other PC resellers for allegedly distributing counterfeit versions of Windows. The company has been in contact with the Beijing resellers, and in most cases Microsoft is actively discussing the terms of a settlement, said Nick Psyhogeos, vice president of Microsoft's original equipment manufacturer business solutions group, in an email earlier this month.

The settlements would include the resellers paying damages and agreeing to stop distributing counterfeit Windows products, he added. If a settlement isn't reached, Microsoft will take legal action against the reseller.

The U.S. software giant has spent years battling piracy in China, now the world's largest market for PC shipments. The company has done so through legal action and public awareness campaigns, the most recent of which has tried to highlight the security dangers of using the pirated products.

Microsoft's recent tests of Chinese PCs bought from local shops in China show that all were installed with pirated copies of Windows. 91 percent of the Windows versions also contained malware or intentional security vulnerabilities that could steal user data such as passwords and credit card information.

The high rate of piracy on the PCs in China can be traced to manufacturers installing a free, but non-Windows operating system on the device before it ships, according to Psyhogeos. The original equipment manufacturers do this to keep costs down, but these PCs will likely be re-installed later with a pirated version of Windows before they go to sale to customers, he said.

In October, Microsoft said it would stop selling Windows as a boxed product in the country, leaving online downloads as the only legal channel through which to buy an after-market copy of Windows.

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