Archive for February, 2008

To me, the best part of a mystery is the pursuit- like the car chase scenes in movies, or when the detective ties clues from the scene to the criminals. In this story, Microsoft sends its own detectives on a world-wide chase to track down software pirates, and they successfully worked their way backwards through the black markets of Taiwan to find the source of the counterfeited software. And they located the woman pirate in charge of an operation that cost the company almost a Billion Bucks in lost revenue!

From the AP here:

Near-perfect knockoffs of 21 different Microsoft programs began surfacing around the world just over a decade ago. Soon, PCs in more than a dozen countries were running illegal copies of Windows and Office, turning unwitting consumers into criminals and, Microsoft says, exposing them to increased risk of malicious viruses and spyware.

The case began to turn in 2001 when U.S. Customs officers seized a shipping container in Los Angeles filled with $100 million in fake software, including 31,000 copies of the Windows operating system.

From there, Microsoft pushed the investigation through 22 countries. Local law enforcement officials seized software, equipment and records, and made arrests. A court in Taiwan handed down the last of the major sentences in December. Microsoft estimates the retail value of the software the operation generated at $900 million.

Members of its 80-person worldwide anti-piracy team made test buys to see if retailers were selling fake disks, knowingly or unwittingly, and worked leads back up the black-market supply chain.

The seizure of the container in Los Angeles led to Taiwan, where the Ministry of Justice raided Chungtek Hightech, recovering an estimated $100 million more in software and equipment. Months later, Taipei city police and the criminal investigations branch of the national police hit Cinway Technology, a related manufacturer in the same industrial complex, seizing another $126 million in phony software. Records found there led to a packing, storage and shipping center in China’s Guangdong province, and back to distributor Maximus Technology in Taiwan.

Finally, in 2007, the owner and operator of Chungtek and Cinway, Chen Bi-ching, was sentenced in Taiwan to four years in prison, while her two co-defendants received jail terms of three years and one year.

Spertus, the former federal prosecutor, said the burden is often on the company holding the brand to travel the world collecting evidence, doing undercover work and coordinating with law enforcement agencies.

What an amazing operation. Microsoft admits there was little gain in busting the piracy ring. The penalties were not very still and most people jailed are already out. When Bi-ching’s operation was broken up, a new piracy crew stepped in to meet the demands of cheap software, and Microsoft went after that one too, busting it up in July last year. That one cost Microsoft 2 Billion in lost revenues.

One security issue about the piracy. For a long time Microsoft would refuse to deliver patches to hosts that were not running authentic copies. Millions of such hosts were on high speed connections throughout the world, but mostly in Korea. Hackers and worms played chronic “King of the Hill” on those unpatched machines, leading to worms such as Nimda, Code Red, Sobig, Slapper, Nachi and MyDoom. It made for interesting times to be in the Infosec field from 2001 to 2004.

Finally Microsoft realized that millions of zombies and unpatched systems were a serious threat to the Internet and they stopped blocking the patch delivery and many affected systems were eventually upgraded to more secure versions.

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