Microsoft to Donate $25 Million From Software Piracy Recoveries

Donations Help Increase Access to Technology for Disadvantaged Communities Worldwide

REDMOND, Wash. - June 29, 1999 - Microsoft Corp. today announced that it expects to increase funding to community affairs activities through new donations of over $25 million from software piracy recoveries - at least $5 million a year for the next five years. Microsoft will be donating these funds to a variety of nonprofit organizations worldwide focused on providing access to technology for disadvantaged communities, as well as to select academic institutions to promote innovation, entrepreneurship and creativity in the fields of science and technology. Software piracy negatively impacts jobs, wages, innovation and revenues in the software industry, which lost nearly $11 billion to software piracy last year, according to a Business Software Alliance (BSA) study released June 16.

The donations will be based on settlement recoveries and judicial awards resulting from Microsoft's efforts to reduce software piracy - the unauthorized copying, reproduction, use or manufacture of software. By supplementing its worldwide community affairs efforts to expand access to information technology, Microsoft hopes to enhance learning and communication in communities worldwide.

"Fighting software piracy is not only a question of countering an illegal activity, but also of countering its negative effects on the economy and the communities it pervades," said Brad Smith, general counsel, worldwide sales and support for Microsoft, who oversees the company's anti-piracy enforcement programs. "As we continue to confront a serious piracy problem, especially on a criminal scale, we think it's appropriate that Microsoft redirect monies recouped from these illegal activities into programs that will spread the benefits of technology more broadly."

Microsoft first launched its Giving Campaign in the United States in 1983 and last year expanded it internationally to assist and support subsidiaries in giving back to communities in which it does business. For example, Microsoft's European Scholar Programme is providing unemployed people with the skills and confidence they need to succeed in the technology industry. Since the program began, more than 6,000 people throughout Europe have been trained, with over 90 percent of the graduates securing well-paid employment in the technology industry.

Today Microsoft is announcing two new recipients of community affairs funding:

• Gateway Business and Community Coalition in Watsonville, Calif. Microsoft will provide computers and training to economically disadvantaged children as part of the Computers for Youth and Schools At Home Program. This project aims to provide technology access and enhance skills and learning to advance students in their education and help prepare them for careers.
• Street-Level Youth Media in Chicago. With technology and media as their vehicle, Street-Level works with underprivileged youth. Microsoft's donation will provide Internet access, networking, new equipment and software as part of a lab renovation campaign to improve existing facilities and provide technology access for more than 1,200 at-risk youth across the city.

Other programs recently funded as a result of the increased donations include:

• Green Thumb in Dallas. As part of Green Thumb's technology training programs to gainfully employ seniors, dislocated workers and disadvantaged individuals, Microsoft is providing donations from its anti-piracy recoveries to help people age 55 and over develop new skills for jobs on computer help desks.
• Cebu State College in Cebu, Philippines. To help physically and mentally challenged students overcome their difficulties and aspire to become important members of society, Microsoft is donating money, computers, software and extensive technical support to the Cebu State College of Science and Technology Special Education Center. Starting with providing technical courses for the hearing-impaired, the Center now prides itself on having become an instrument for enabling disadvantaged persons to learn to be computer encoders and technicians.
• CyberCare in Kuala Lumpur, Malaysia. Microsoft is donating multimedia personal computers equipped with video-conferencing kits, Microsoft® software and Internet access fees, as well as a server, to seven orphanages in Malaysia. This program will enable orphaned children to connect with one another and develop technology skills that will help them succeed as adults.

Criminal Counterfeiting on the Rise

In the past two years, organized criminal counterfeiting has grown dramatically around the world. Counterfeit manufacturing facilities have been found in California, Texas, China, Russia, the United Kingdom and several other countries. For Microsoft's fiscal year 1999, the company reported a total of more than 4.3 million units of counterfeit software seized by law enforcement authorities, nearly five times the amount recovered in 1998. The profits from distribution of counterfeit software are often used to strengthen a range of criminal activities, including money laundering, narcotics, kidnapping and even terrorist operations. Numerous large corporations and government agencies, with the intention of acquiring genuine product, have been misled into acquiring counterfeit software. This software is increasingly distributed over the Internet, and customers deceived into acquiring such software find it plagued by viruses and inadequate documentation, while the purchaser is left ineligible for technical support or upgrades. As a result, Microsoft has steadily increased its efforts to maintain the integrity of the software distribution channel and educate consumers about the risks and negative impact of software piracy on the economy.

Coordination with law enforcement has become critical to Microsoft's ability to address criminal counterfeiting of Microsoft software. A recent investigation leading to the seizure of $56 million worth of Microsoft software and the arrest of 12 people was a joint effort by the U.S. Attorney's Office, the FBI, the Westminster Police Department and the Orange County District Attorney's Office.

"The broad popularity of computers and the new distribution methods afforded by the Internet have increased the need for law enforcement to pay closer attention to high-tech crimes. Fortunately, Microsoft has been a tremendous partner in helping us crack down on some of the large-scale criminal counterfeiters in the Southern California area, many of which are involved in other types of crime and are damaging to our society," said Chief James Cook of the Westminster Police Department. "Today's announcement demonstrates that the company is truly interested in giving back to the communities where these criminals have seriously eroded the legitimate software industry."

Customers or resellers with questions about the legitimacy of Microsoft products should contact the Microsoft anti-piracy hot line, toll free, at (800) RU-LEGIT (785-3448), or send e-mail to piracy@microsoft.com. Information about software piracy can also be obtained by calling the BSA anti-piracy hot line at (888) NO-PIRACY (667-4722) or sending e-mail to software@bsa.org.

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