All roads lead to Buraimi?

In a two-month long undercover report, Windows User sent its chief undercover reporters on a mission spanning the Gulf and Asia to discover the real story about piracy in the Middle East.

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By  Will Milner Published  September 28, 2000

In a two-month long undercover report, Windows User sent its chief undercover reporters on a mission spanning the Gulf and Asia to discover the real story about piracy in the Middle East.

Piracy: Does it exist? If so, why does it exist? Is it prospering? And from where is it being supported? In a series of often dangerous exchanges with dealers, distributors and the underworld - as well as meetings with the Dubai-based Business Software Alliance (BSA), our specially trained journalists followed the trail of illegal software from mafia-controlled, Singaporean production facilities, through Dubai and Al Ain distribution routes to the new Middle East piracy capital: Buraimi, Oman.

To protect certain sources, any resemblance to individuals suggested by the following article should be taken as entirely coincidental. For legal reasons we have been unable to name individuals, distributors and mafia uncovered by our research.

Intelligence gained through our research on criminal organizations and individuals operating in the region have been lodged with the BSA.

If all software were illegally copied, there would be no software. The argument against piracy is never more powerful than in this single fact. Without funds to research, develop and distribute applications, individuals and organizations can have no incentive to produce them. And without software, in many ways a more important product than hardware, the IT revolution of the last twenty years would never have happened.

Software too, is entirely responsible for the switch from old-style product based, to new style solution-based economies. Judging by our mail, a significant number of Middle East readers believe that software vendors encourage piracy by charging prices for applications that Middle East business and the consumer cannot afford.

While there is no doubt an issue about the affordability of certain applications, we believe that this can never, under any circumstances, amount to a justification for an activity which risks destroying the future of software, and, more critical still, the Middle East economies and workforce which depend on it.

The following report represents the first undercover study of piracy ever undertaken in the Middle East. Historically, simple statements and features based on the premise that piracy is wrong have always been deemed to be sufficient. However, Windows User takes the view that the long-standing cultural acceptance of piracy requires more than simple statements, however powerful.

There is, for example, little documented evidence of mafia involvement in the activity, almost no research into the source of pirated software in the Middle East - and only vague, often counterfactual assertions that pirated software is of a lower quality than its legitimate counterparts.

Research of this nature is also expensive, and potentially dangerous -often it is just simpler to leave piracy to the courts rather than seeking to educate and explain the negative effects of the practice through solid research. How many individuals realize, for example, that piracy hurts the Middle East economy in terms of inward investment and employment?

How many people are aware that piracy stems not from "innocent" shopkeepers seeking to support families in a culture brought up on "sharing”, but rather on criminal, often violent, gangsters at war with legitimate governments - and, by definition, the people, you and I, they look after?

How many people realize that, if piracy is not dealt with, we may see companies like Microsoft shipping out from the Middle East altogether. Love Microsoft, or hate them, the company invest enormously in the Middle East, encourages other companies to re-locate here - and supports much needed employment in the region. In eighty years, when oil revenue collapses, we will need a strong IT economy to take over.

Days One - Five: Sim Lin Square, Singapore

The first problem in research of this nature is tracking down outlets for illegal goods. Increasingly, there is recognition by Middle East governments, particularly in the UAE and Jordan, that piracy needs to be tackled, the result driving the activity underground and away from enforcement bodies.

According to Windows sources, any attempt to understand piracy in a Middle East context alone, would miss the global sources of the problem and risk diluting the real criminal character of the trade. As a result, we were directed to Singapore, the point of contact for the trade between Hong Kong and Malaysia.

Here, we were advised, we would find retail outlets operating as every day shops, selling software, videos, CDs - "if it's not in Singapore it does not exist." Reports of mass, legitimate-style establishments selling pirated software struck us as implausible and it was with no small degree of cynicism that we landed in Singapore.

We had been unable to find a source willing to openly assist us in Singapore, so we resorted to the assistance of taxis.

When we embarked on our first trip we were immediately skeptical that we were to be taken on one of those typical tourist rides that take you nowhere - except a meeting with your bank manager on the subject of your spiraling overdraft problem.

However, ten minutes from Singapore airport our driver informed us: "This is software," dropping us in the main thoroughfare outside the famous Sim Lin Square. The shop looked like a standard high street boutique, the only difference being the lack of a sign identifying it. Inside, we estimated that more than three thousand CDs were openly for sale, at a price of 10 Singapore dollars each.

Titles included even titles yet to be released in the Middle East, including Windows Millennium and Adobe Photoshop 6.0. We counted more than fifty people shopping for the software, giving you an idea of the size of the retail outlet. Staffed by one individual we felt reasonably safe asking about the source of the software on the pretext of imaginary applications we could not locate.

However, the individual storekeeper turned into three and we were asked to leave.

We caught a second cab and two minutes later we were dropped at an identical looking store, this time selling pirated video CDs and DVDs. Here we found titles ranging from the X-Men to Coyote Ugly, neither of which had yet had a release outside the US. In total we visited 14 stores over a two-day period, enough to ascertain that CD based media - whether film or software is easily obtained.

We also gained access to a source by telephone that agreed to speak with us about the trade in the UAE. She advised us to look at a US government document that could be delivered for payment: The US Department of Commerce Bureau of Export Administration Denied Persons List (DPL). She claimed that individuals related to the trade could be traced to this document, but the source did not arrive at the agreed meeting place.

We returned from Singapore with a pre-defined catalogue of video and software CDs ranging in manufacturers retail prices from $50 to $3,000. We located the DPL list but, in the time available to us prior to publication, have yet to be able to establish any links between piracy and operations in Singapore and the Middle East.

Indeed, if this list were to be taken as relevant, of which we must remain doubtful, piracy operations extend to nearly every corner of the globe.

The limits of our research proved to be PC companies operating between Singapore and Iran. As we have been unable to detail a certain link, the value of this document is related only to hearsay. Later research has tended to suggest that the relationship between Singapore and Iran, if related to software piracy distribution, is likely to be indirect.

Our sources believe that software is likely to arrive directly by plane, this explaining the volume of contemporary, or yet-to-be-released software we were eventually to trace to Oman.

Days Six - Nine: Khalid Bin Al Walid Street, Dubai

Our Arabic undercover reporter in the Middle East faced similar difficulties. Our European team's endeavors prior to the Singapore trip had proved fruitless. Well-publicized crackdowns by the Dubai government have driven the Dubai trade underground and on one incident our team believed, though it remains unsubstantiated, that they were followed after asking questions in a Dubai outlet.

This, however, confirmed our sources warnings that if our journalists' cover were to be blown they could face some danger. As a result, at no time during the research were our journalists allowed to carry cameras or recording materials, to offset the risk of their being discovered.

Our reporter traveled to Khalid Bin Al Walid Street in Dubai. This area, according to our source, has in the last twelve months, and for at least 10 years before that, offered pirated software openly. Widely recognized as the most famous computer district in the Middle East, it is also one of the busiest.

Our journalist was eventually to spend three days in the area, visiting over two hundred outlets and market-style outlets. In the first of these visited, Mr X told our reporter: "I stopped dealing with this(sic) a while ago. It is almost impossible to find copies in Dubai now…. The police are stopping us." Of more than 200 shops and sub-outlets visited by our journalist the story was broadly identical.

Our key findings over three days were that, first; Police are checking targeted shops and outlets every 10 days, second; A standard DHS 10,000 fine is now payable for selling pirated software, third; A widespread fear exists of being deported to the country of origin amongst vendors and, fourth; that even speaking openly about piracy was perceived as enough to risk a jail sentence.

Day Ten: Computer Plaza, Karama's Market Place, Dubai

On day four, our journalist moved to Computer Plaza, a relatively recent computer mall of small outlets and market-type outlets. Here our journalist experienced complete silence on software piracy and faced what he termed "blanket hostility" from vendors. Significantly, insider information had given us a lead that here we would find major outlets.

The story was similar in Karama's Market Place, another lead from a credible source, but one again that drew a complete blank. Our reporter's last destination took us away from the visible commercial centers of Dubai to the home of a "known retailer" of pirated CD gaming software in Karama.

The seller, Mr Y, would only let our journalist into his home after his referring to "Mr A", a contact we had been told as "trusted". "Mr Y" finally gave us a lead: "Yes I can sell for twenty dirhams, but I will pay 10,000 dirhams to the police - what is the point? Go to Buraimi, maybe Al Ain. This is the safe place for them now." After repeated questions we were told that the "them" referred to "Singapore families".

On the basis of our research we believe that illegal commercial software piracy has been eradicated in Dubai.

Day Eleven: 'The Street', Al Ain

On day five our reporter traveled to Al Ain, a two-hour drive from Dubai. Surprisingly, given the results of our research this far, the message was consistently to "go to Buraimi". Our journalist, however, noticed a difference in attitude to that experienced in Dubai.

The difference, a disinterest in discussing piracy, was not through fear of sanction. From statements received by our reporter, the perception is that pirated software in not illegal or criminal - and Buraimi is just a collection of specialist shops with no more illegality than Woolworths or Spinneys.

After two hours, it became clear that Al Ain's relationship to piracy is only as a stopover for visitors to and from Buraimi.

Day Twelve: Buraimi, Oman

Arriving in Buraimi at 10:00pm, our journalist was questioned in the first of forty-two outlets visited, by Mr B: "Are you from Dubai?" Asked why this was significant, Mr B responded: "If you are from Dubai, I know what stuff you are looking for."

Our reporter was told: "I have all the CDs you could ever want and at a very cheap price." After we produced our pre-written catalogue of software and film titles, we were asked to return at 5:00pm: "I need to get them from my house." Our reporter then said that he could not wait, and Mr B responded: “OK. Go through the back and wait." Our reporter was ushered into a windowless room at the back of the store. After four minutes Mr B returned with approximately two hundred CDs. We negotiated the price down from fifty to thirty dirhams for software ranging from AutoCAD and Photoshop, to Microsoft Millennium Edition.

Our reporter spent seven hours in Buraimi. We obtained software and film titles with a value in excess of US$12,000. This included an identical copy of X-Men as that received from Singapore, and yet to be released in the Middle East. Of twenty titles gained in Dubai, four matched titles obtained in Singapore, including the packaging. Other titles had clearly been copied and we were unable to track the "original" media.

We were unable to gain corroborative evidence in Buraimi because no vendor would answer questions about the source of the software. We were also given a list of banned film titles that could be obtained within two days. Our reporter obtained business cards from each respective vendor during the course of his research.

It became clear after asking questions in the thirty ninth store that Buraimi vendors were aware of our journalists presence and our reporter left Buraimi after an incident in which he was questioned whether he was working for the Dubai police.

Day Thirteen: The Business Software Alliance, Dubai

On Day Thirteen, Windows User gained exclusive access to Ashok Sharma, the longest serving anti-piracy professional in the Middle East. We have been unable to report fully on an interview that ranged from threats to plant drugs on informers, and more severe cases of violence, to various legal actions in the last ten years.

In the context of our research, we learned the unfortunate fact that the BSA only works with the police to close down consumer outlets because they are high profile - and not because they represent a significant impetus to piracy.

The BSA has little interest in these shops because the real piracy crime for Ashok is business: "70% of software piracy is within Middle East commerce. Businesses buy a single copy of an application and share it across networks. There can be no justification for wealthy companies pirating software to save a few hundred dollars. It's criminal. And it's wrong."

Ashok heads up the BSA's "enforcement" operations. Partners include Microsoft, Adobe, AutoDesk, Bentley Systems, Macromedia, Symantec and Corel. Other "policy" members, including IBM, Compaq and Intel, assist the BSA through campaigning and creating public awareness. Enforcement activities come into play when these fail, at which point legal action can have the effect of closing down a business entirely.

Ashok emphasized, however, that the BSA acts only after a significant number of written and verbal warnings. Only when these fail are the government and police asked to assist. In September, an Abu Dhabi based company was raided, every PC confiscated and a case filed with the Abu Dhabi prosecutor. The fines, losses incurred by downtime and public humiliation cost the company its business.

Singapore-Oman distribution routes: The China link

We discussed the results of our research, and in particular the link with Oman, with Ashok. We asked whether our inability to find a single supplier of pirated software in Dubai surprised him. "Your experience in Dubai was completely unimaginable even five years ago.

But with great pride I can say that the BSA has succeeded in ending the commercial trade in pirated software in Dubai. And the reason that it is important is because today Dubai has more IT companies, more IT shops, more IT employment and a much stronger IT economy than any other region in the Gulf.

Piracy is never associated with strong economics," said Ashok. The reduction in piracy across the UAE, Ashok informed us, constituted "the highest reduction in the shortest time ever recorded in the history of piracy enforcement, but countries like Oman still present problems.”

Ashok was equally clear on our tracing a direct route from Singapore: “Three years ago the US cracked down on China, demanding changes to their stance on illegal software. As a result, pirate software factories splintered between Singapore, Hong Kong and Malaysia. In fact, by cracking down on China, the problem got much worse. Singapore is about organized crime, and despite many initiatives there, we have never been able to catch the real criminal."

Ashok also filled in some of the gaps in our research on the logistics of the route between Singapore and Oman. "We operate random checks on the air route. This year we have seized multiple 50,000 unit shipments from local airports - and this is the primary means of importation," Ashok clarified.

I asked why the BSA had not been able to bring pressure on the Singapore government. "We have personally spoken to the Singapore government. But the fact is that they have an extremely serious problem with organized crime. What I can say is that the Singapore government is aware of the damaging effects its underworld's activities are having on the Middle East."

The BSA predicts that within five years the problem will have been removed from Buraimi. “It has taken five years of sustained fining in Dubai to produce this result. It will take at least this long in Buraimi,” Ashok told Windows User.

Pirated Software: In the Labs

Windows User tested the pirated software and videos we purchased during our research to ascertain whether pirated products are generally of a lower standard than those legally purchased. We found that 80% of VCD movies were recorded in cinemas in which background noise from the audience was clearly audible.

In 5% of cases this significantly reduced the enjoyment of the film. 25% of our films had been cut to fit them on two CDs, and in 40% of cases the film image was accompanied by small moving numbers or logos that we have not been able to explain. In the case of software pirates, 100% of software functioned properly. However, no package included complete help files or standard documentation. A single piece of software contained the 'worm a' virus.

Pirated Software: In the Courts

The law on copyright theft is simple. The act of making copies is illegal, rather than purchasing it. However, in practice, if police visit a business and find copies, there is no way the business can prove they did not make the copies, and the legal assumption is they did.

The fine in Dubai is currently AED 550,000, but a loophole has resulted in AED 10,000 penalties. The Dubai government is slowly eliminating the loophole. Convicted shops are closed for a minimum 30-day period. “Businesses are risking more than they are saving. They risk legal prosecution, their image in front of employees, public prosecution, a AED50,000 fine - and potentially more according to the discretion of the presiding judge. Is it really worth putting their business on the line to save a few hundred dollars?” Ashok questioned.

Pirated Software: The Facts

Of the 70% of software used by business In Dubai and Abu Dhabi, only 10% is still pirated. The 10% of pirated software attributable to commercial outlets has now been eliminated. Of the 20% of software used by the Middle East consumer, 15% is still pirated. Within Sharjah similar figures apply, although there are enclaves of pirated software activity remaining. Smaller emirates suffer from a minor problem.

The case elsewhere in the Middle East is very different. Oman is the worst offender with levels exceeding 85% piracy; Saudi still has levels above 73%. Kuwait's situation is different according to the BSA: “Although in Kuwait the piracy rate is at over 90%, this is an unfortunate situation. In the last 10 years the Kuwait government has had to re-build the country from scratch - Iraq even took their traffic lights.”

Only the UAE and Jordan governments are currently 100% committed to action against software pirates, if that is measured by crime rates, prosecutions and current piracy levels.

Pirated Software: Pricing Solutions

Windows User believes that Microsoft's response to consumer piracy is instructive and welcome. Almost uniquely, Microsoft discriminates for key groups in society, including students, teachers, parents and educational institutions, to provide software at a discount. Because of the damage inflicted by piracy however, Microsoft has not invested sufficiently in awareness of its educational discounts.

We interviewed 200 students, teachers and parents randomly - not a single interviewee was aware that he or she qualified for educational discounts. In fact, Microsoft Visual Studio, a product that retails at over $1100, is available, with Visual Basic, C++ and J++ for $99 to these groups. Microsoft Office, a product that retails at over $650, is available for $99.

Other manufacturers have made some move to adopt Microsoft's position. AutoCAD, for example, makes 10 package licenses available for the cost of a single license to schools and colleges, a discount worth more than $27,000. Adobe offers a similar system, but, like AutoCAD, restricts its offer to institutions rather than teachers, parents and students.

On the basis of our research, Microsoft, Adobe and AutoCAD are clearly not publicizing their welcome initiatives effectively. Our advice is for members of these groups seeking Microsoft products to visit their local retailers and ask for the discount. You should be asked to pay the discounted price and then be given a form, with postage already paid for DHL transfer to Microsoft Gulf. Microsoft informed us that the software should arrive within a maximum 48 hours.

Pirated Software: Business Solutions

Ashok informed us that the BSA solution is simple: "We encourage small companies to speak with us. In genuine cases we will always help through phased programs of payment for the software they need. We absolutely will not pursue people who come to us with genuine payment issues.

There are many cases in the Middle East where Adobe, AutoDesk and Microsoft have agreed not to pursue companies after an implementation schedule has been agreed. We always look to the facts of each case. However, in cases where there is intransigence, the BSA will always prosecute." The BSA encourages companies requiring assistance to contact +971 4 800 4828.

Pirated Software: Encryption Solutions

The failure of software encryption and dongles as a means to avoid piracy is well documented. If hackers and crackers can enter the Pentagon, then software encryption is not likely to prove an obstacle. However, what is less well known is that dongles and encryption actually often unfairly disadvantage the legitimate customer.

A dongle that fails can cost genuine business customers a week's revenue, and loss of good will, in down time. The pirate doesn't need to worry. Dongles and serial numbers are examples of 1% solutions. They are effectively meaningless, but do stop a marginal number of cases. Windows User believes that, where such systems can damage business revenue on failure, software companies should not use them. On balance they simply don't work.

Pirated Software: The Loophole

A major problem with the current system emerged from our discussions with the BSA. The only way a business can prove legally that it has purchased software is via the certificate of authenticity. However, many companies are unaware of the role of these certificates and often discard them.

It will be of great concern to many businesses that separate serial numbers on a machine, or even a receipt, will not be accepted as a defence in court action. Certificates are the only way to prove the purchase of software. Any companies operating without these certificates are liable to successful prosecution.

Windows User estimates that of the more than 100,000 medium-to-large businesses operating in the Middle East, a sizable percentage may have purchased software legally but disposed of the certificates. We believe that in some cases this may result in wrongful prosecution.

Software companies need to accept a degree of blame for this situation.

We examined certificates from twelve of the regions largest software vendors. No single certificate adequately represented the importance of keeping the document as a defence in cases of legal action. As a first step to resolving this, we recommend that software companies highlight the importance of these documents with clearly visible and worded warnings that certificates must be kept - and that a failure to do so could result in their being prosecuted.

Windows User Piracy Report 2000: The Verdict

Our conclusion is that the link between job creation and a zero tolerance policy on piracy is firmly established. In the Middle East, the link between inward IT investment and low piracy levels are tangibly evident in Dubai.

With eighty years of oil revenue left, at a maximum, the fact is that the Middle East can no longer afford to tolerate this activity. Our tracing of the piracy trade route to Buraimi comes even after more than 3000 copies of illegal software were seized in the previous week and individuals taken to jail in Muscat.

We call on the Oman government to act before we find the same sort of mafia activities we traced to Singapore moving to Buraimi. The confusion with regard to the legality of pirated software in Oman raises serious concerns about the responsibility of those trading and purchasing software. We conducted a random survey in which we asked 250 individuals whether they were aware that pirated software was illegal in Oman. 80% believed that pirated software was legal in Oman and 20% were unsure.

The fact that not a single person interviewed believed pirated software to be illegal suggests that public awareness is poor. More worrying, it is hard to see how the BSA, or Oman's government, can morally hold individuals liable for activities they believe to be legal. Of great concern is that the BSA is currently under-funded by 500% in comparison with their US and European counterparts, severely limiting their ability to deliver an effective service. The need for a massive public awareness campaign across the Middle East is indisputable on the basis of our research.

This situation needs resolving and Windows User urges Middle East government and software manufacturers to drastically increase their funding to a body under-resourced to fight for their interests. On current funds, we estimate that the BSA is not even able to send one fax to more than 15,000 businesses, before hitting a revenue shortfall.

Commercial software piracy is the most high profile component of the software piracy equation. Surprisingly though, it accounts for a maximum 30% of the total revenue lost from piracy every year. Commercial piracy, like that uncovered in our undercover report, does have knock on effects that damage the consumer.

Windows sources have told us that Microsoft, for example, has little interest in the leisure side of its business in the Middle East. There is no dedicated consumer software division, as is the case in Europe and the US, and the result is that Microsoft's presence in the gaming market is negligible. This bodes ill for technologies like the x-box. Can you imagine the x-box not being brought to the Middle East?

At current levels of Microsoft commitment to the consumer there is every chance the Middle East will not see it - and it's due entirely to piracy. Microsoft's launch of Millennium too has been less than spectacular. A few Point-of-Sales stands in a couple of Dubai shops certainly do not constitute a launch by any except third world standards. And why has this happened? Windows sources make clear it is because Microsoft knows that Millennium has already sold thousands of copies across the Gulf - all entirely illegal.

As if this regrettable state of affairs were not enough, the Middle East also suffers from negligible corporate sponsorship and public service investments in schools, hospitals and other public infrastructure - hardly the case in either Europe or the US. Why? Again, because the consumer software business earns no revenue except for the pirates.

Windows User research has revealed that there is no group fighting against consumer piracy in the Middle East. The fact is that it is extremely unlikely any consumer would ever be sued for having illegal software. To sue individuals would be a PR catastrophe for any company - and it simply makes no financial sense. The reality is though, that unless consumers themselves choose to refuse illegal software, the Middle East will continue to be a consumer software backwater.

Already we have a near comatose gaming industry. You can count the number of gaming magazines in the Middle East on two fingers. In Europe and the states it's on four hands. Of the three games distributors in the region, all have pitiful levels of marketing and advertising - and historically the gaming events in this region have been crude and embarrassing.

Why? Where is the money to invest when very few people actually buy leisure applications? Why are there only three pages of games reviews in Windows User? Microsoft, Red Distribution and Bluehorse claim it is because they cannot justify advertising from their sales revenue. It is too simple to say that individuals cannot afford $40 for software when the result is a consumer software industry on its knees with no visible way out. In a nutshell, buy Windows Millennium.

If you do, maybe next time Microsoft will have the ability to invest in a European or American style launch, rather than the lacklustre spectacle we witnessed as we went to print.

If the consumer software sector has to police itself, this is not true of the business sector. Piracy is not trivial. The United Nations is increasingly viewing intellectual property as a fundamental human right, in the same way that it views the right to life, free speech and liberty. "If an individual has an idea and a large company stole it, and proceeded to make millions of dollars from it, everyone would be outraged.

There is no difference between this scenario and the activities of those businesses in the Middle East that use pirated software. It's stealing - and it costs the Middle East jobs and its reputation abroad," the BSA told us. We agree. When oil revenues run out, none of us who consider our home to be in the Middle East, visitors or otherwise, wish to see it collapse into a third world economy. It's all our chance to make the Middle East one of the IT capitals of the world. Success will depend on every one of us. It's your call.

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