Microsoft to Customers: Audit, or Else

Company sending letters to customers demanding software audits and results within 30 days.

In its continuing Jihad against software piracy, Microsoft Corp.s legal department has sent letters to corporate customers demanding they conduct internal audits of their software licenses and submit their findings within 30 days to the Redmond, Wash., company.

The letter, using no less intimidating language than the Internal Revenue Service would use, also includes a form that spells out the audit process. Customers must report number of installs, documented licenses, license upgrades and unlicensed software. Covered in the process are operating systems, Office suites, individual applications, BackOffice products and the Visio product line.

In addition to the audits costing IT shops time and money, some well into five figures, several customers contacted last week who received the letters without warning said the notices bordered on harassment.

"I dont want the federal marshals to walk in here with a warrant," said a CIO at a Midwestern health care concern, who asked not to be named. The stern missive he got was dated May 16 and signed by Microsoft corporate paralegal Heather C. Logan. Hes already asked for a 30-day extension to comply with the strongly worded letter, which in italic type reads: "Please complete and return the audit survey within 30 days."

The letter stops short of threatening repercussions if a recipient doesnt comply, but Microsoft Associate Counsel Nancy Anderson said hauling customers into court would only be "a last resort." Anderson added that Microsoft has targeted 5,000 midsize businesses as part of its long-standing anti-piracy campaign.

"Its medium-size corporations who we believe have a larger compliance problem as a result of growing rapidly," Anderson said, soft-pedaling any notion Microsoft is ready to use the big stick.

Regardless, some of Microsofts most loyal customers said they feel whacked. One vice president of information services at a financial services company, who also asked to not be named, said he doesnt begrudge Microsofts right to pursue unlicensed software but questions its tactics. He said he initially received a mild letter asking if his company would volunteer to be part of a compliance program. Then, in March, a sterner letter requesting the audit came from an outside law firm apparently working on Microsofts behalf.

"They want to scare us into compliance. A Microsoft rep has never been here and asked us about it, and the information they have about our licenses is so inaccurate," he said, adding his company has spent about $200,000 on Microsoft products over the past several years. "For your business partner to be that bad, if there was a competitor some day, Id switch. Youd think they have bigger fish to fry."

The health care CIO said he has no idea how he was selected and estimates the audit will cost him between $10,000 and $20,000. "We have very solid practices about who can buy software and who cant," he said. "I dont have enough hours in the day to be the software police. Were a rural health care facility."

Kym Pfrank at Union Hospital Inc., in Terre Haute, Ind., got the same letter as the health care CIO but is taking it more in stride, even though it will cost the hospital $10,000.

"It didnt bother me too much ..." Pfrank said. "The government has stepped up their reviews of hospitals, looking for Medicare fraud and that kind of thing. Its just another thing to deal with."