Ballmer: Microsoft Will Stay in China

Microsoft does not plan to follow Google’s lead in pulling out of China, the software giant’s CEO told news outlets on Thursday.

“We’ve been quite clear that we’re going to operate in China,” Microsoft CEO Steve Ballmer said in an interview on CNBC.

However, his hopes for China to produce growing revenue for the company seem to hinge on a thorny issue: a reduction of piracy and intellectual-property theft.

“China ought to be a source of growth,” Ballmer said. “Intellectual-property protection in China is very, very bad. Abysmal. … We’re buying a lot of goods from China but the things that U.S. companies can sell — pharmaceutical products, media, software — it’s all intellectual property and design, and that stuff’s not getting paid for in China. It’s got to change.”

His reference to the problem of IP theft points to bigger challenges Microsoft could face if it decided to leave China. Microsoft has been battling software piracy there for years, and pulling out of the country could amount to it giving up the battle and allowing piracy of its products to flourish unchecked.

In the interview, Ballmer did not raise the issue of censorship or human rights, which Google said were central to its new approach to the country.

Google said Tuesday that it planned to stop censoring its search results in China after discovering the theft of some of its intellectual property during a “sophisticated cyberattack” originating in the country, and learning that Gmail accounts of human rights advocates had been broken into. It acknowledged that, as a result, it would likely no longer be welcome to operate in China.

Microsoft, Google and many other companies have been criticized for complying with China’s censorship laws in order to do business in the country.