Steve Ballmer on China Theft of Software

Steve Ballmer, former Microsoft Chairman, was on Fox Business this morning talking about software being stolen in China.  His views on this were reflected in the decision to allow Microsoft to sell software in a country that stole all of it.  He was clear that all of it was stolen and would be stolen, even if Microsoft did not sell any software in China.  I always thought that was Bill Gates' idea - to sell software when they know that 90% of people who use it in China were not paying for it.   He thought the same might still be true.  So, sell what you can, knowing that the use of 90% of it would not be paid for.  It makes business sense, but as he mentioned, it also breaks the model of business operations around the world.  That part needs to be addressed.

China is a model of how a criminal enterprise works.  You can't bargain with a criminal enterprise, and you can't set agreements with one to stop some of its successful business practices and settle for less profit.  So, what to do?

The current administration has tried tariffs which is not likely to work, but makes a trade-off that is worth doing in the interim.  If China continues to steal everything, we might as well profit from their theft.  That is kind of how Microsoft was thinking in selling in a place they knew would steal everything.   Tax, though tariffs, works because the US gets revenue from everything that was stolen and manufactured in China, even though the consumers of those products are the ones that pay for it.  It makes manufacturing anything in China more expensive.

Ballmer said he did not know what would work.  I think there is something that would work, but it might be something we don't want to do.  Look at what it takes to disrupt a criminal enterprise. We can't destroy it, but we can disrupt it, and we do know how to do that.  Only history tells us that it takes a concerted effort, requires disruption in ways that use redefined laws to address the criminal enterprise way of operating, and infuse law enforcement with people who understand organized crime and how it works.  The enterprise will fight back, attacking the proponents of the strategies needed to combat this kind of crime.  It takes perseverance and political conviction.  Do we think we have that in the places where it is needed? Unlikely.