The question skews the interests of (for-profit) companies in the private sector. Alas, their complaint has a whiff of a desire for an easy, free rescue by the U.S. government as the industry hopes to surf the recent tides of “resource nationalism”. Surely the government can rescue Silicon Valley from its follies, since the Fed rescued Wall Street from its foolish deals. After all, both made fortunes from hype: one from irresponsible lending hype and the other from the Y2K bug. Never mind that the market value of Microsoft is now twice the value of Citigroup, the American banking giant!
The essential fact remains that such materials and the so-called intellectual property rights are privately owned, produced and sold with a fundamental “design flaw” of easy duplication that easily crosses national borders and is effortlessly duplicated on Main Street USA, in a Bangkok backstreet, or swapped over the Internet with one side being 12 time zones away from the other. These inventions have superseded the mindset of laws and international conventions enacted a long time ago, before Microsoft, Google and iPods gained currency. The IT sector has created a modern “give it away” business model, unheard of a few decades ago. These private companies operate on a worldwide basis and they, not their home governments, are best placed to challenge illegal practices in local (foreign) courts. If such jurisdictions are lucrative for their sales and marketing operations, they cannot run back to the U.S. government for cover and enforcement muscle, where those unresponsive “foreign” legal systems happen to be the source of other advantages gained by the U.S. economy. It can all be negotiated into a new legal structure, but chances are that other “shocking” findings (such as cheap or unsafe labor practices) will come up in any global rounds of fair trade negotiations. And what will be the impact on the price of goods that eventually end up at Wal-Mart, and the resulting inflation? Surely the U.S. Trade Representative knows the answer to that one.
Secondly, the referenced “loss” is an exaggerated misnomer, if not a disingenuous one. It is not a loss, but a hypothetical foregone opportunity for income that will never be realized at American market equivalents. More than two-thirds of the world’s population simply does not have the purchasing power, the promise of economic returns or the market structures to justify the prices set in American or/and Western European markets. Actual unit sales, at the American definition of “prices”, will dwindle exponentially if a $200 software package is offered for sale where incomes are about $2000 a year. The street price of “illegitimate” copies is a telling story-- copies sell for as little as $2, purely because locals cannot afford a $10 copy.
Producers of standardized products (Coca Cola, McDonalds, cigarette and drug makers) price and market their products to fit local purchasing power, income profiles and consumer affordability. A wide price disparity for the same products is most evident in the EU (where the ratio of per-capita incomes between member states is as high as 20-to-1). And the modern dilemma for software makers is that their product can travel at the speed of an internet connection. These IT companies will kill their own home markets, and business model, if they sell a “legitimate” package in, say, Thailand for a fifth of U.S. prices. These goods will find their way back to their home markets and unlike cigarettes, consumer goods or medication, there are no visible legal structures (such as local licensing, excise tax or labelling requirements) to stand in the way. Laptops are made to travel.
The competitive market for software measures “success” by frequency of use, and not profit. The producer will go out of business if users in our interconnected world shy away from a product because of price, distribution controls, or other restrictions. Companies like Google are no longer just “American” as more than 51% of their revenue is generated outside the U.S.
Without wider use of their products, supranational companies could not grow to be giants in less than two decades. The referenced costs, in terms of loss of opportunity, are merely part of the modern business model that the IT companies have created for themselves. They called it the “new economy”.
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