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A controversial antipiracy technology built into Microsoft's Windows XP operating system has been cracked, a security firm reports.

Within hours of the operating system's launch on October 25, malicious coders in Asia began distributing a software program over the Internet. The program allows users to bypass Microsoft's Product Activation technology, which is designed to prevent users from installing a copy of Windows XP on multiple computers, according to BitArts Lab, a U.K.-based digital rights management firm.

The Microsoft technology requires all users to "activate" their copy of Windows XP soon after they purchase it. This process "locks" a product identification number assigned to each copy of Windows XP to the PC it is installed on, and then issues an activation code based on that configuration.

When the activation process is complete, a user registers the activation code with Microsoft by phone or over the Internet, which stores it in a database. The company can then scan the database for conflicting activation codes to identify software that has been installed on more than one machine.

But some users have managed to get around that process with a program authored recently by computer hackers that allows them to strip the activation technology from the software, BitArts says in a statement.

No Surprises

Microsoft says it is aware of the apparent code break, adding that it is not surprised that crackers were at work looking for ways to get around its technology.

"Product Activation isn't a silver-bullet solution, it's just one of many measures that Microsoft has taken to protect its intellectual property," a Microsoft spokesperson says. "It was never assumed that the technology wouldn't be circumvented."

Microsoft has touted Product Activation as one of its key efforts to protect against "casual copying," which is when a user buys one copy of Windows and installs it on multiple computers. This type of software piracy contributed to about half of the estimated $12 billion lost last year to the sale of counterfeit software, industry groups have said. Microsoft now admits that Product Activation was never likely to root out more sophisticated software pirates, but rather to cut down on the casual sharing of its software by individual users, according to the spokesperson.

Nothing's Perfect

Microsoft Chief Financial Officer John Connors, speaking at a press conference in San Francisco after the operating system was launched, said Product Activation was never intended to be unbreakable, but that it would help protect the company from losing out on a chunk of its revenue.

"Our intellectual property, similar to the music and motion picture industries, should be paid for," Connors said at the time. "[Product Activation] makes people aware of what our licensing plan has always been."

Windows XP is the first software release from Microsoft to broadly use Product Activation, though it was successfully tested in earlier products from the company in Europe and Asia.

During beta testing of the operating system, the antipiracy technology came under fire from critics. They charged Microsoft with undermining the privacy of users by collecting information about their computers, and said the technology made it difficult for them to exchange components in their PCs after they had installed the operating system. Microsoft made changes to the technology in order to assuage those concerns.

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