DELONG: It’s probably best not to pay so much attention to piracy. One free program running illegally on a machine is an opportunity to sell an upgrade. Two weeks ago I tried to install a perfectly legal Windows 98 disk over Windows 95. Lo and behold, it says this disk will not install as an upgrade. Microsoft is using [software] code to enforce its property rights in a way that makes my life considerably more annoying.

DELONG: Right.

WEBER: Brad’s story shows Microsoft doesn’t understand what its real intellectual property is. It is not an obsolete operating system which it was able to sell for $89 two years ago. It has to be in innovation. They should be giving away the old stuff. They should want everyone in the world to have an obsolete version of their system.

ZYSMAN: Can we take a step back? Gates’s concern that he has a product that should not be appropriated is a real concern.

ZYSMAN: The real question is not moral, it’s strategic. Are people fighting last century’s battle, when in fact digital technology is instantly replicable, perfectly replicable?

So is Microsoft fighting the last war?

WEBER: This battle may have made sense in a monopoly environment. But there is a new model now–give away the basic operating system and sell value-added services–and that’s only one.

Does that mean that the Linux open-source system is more of a threat than pirates?

ZYSMAN: It’s not Linux versus Windows. This is the first of many challenges.

WEBER: The underlying theme is that you’re trying to protect a piece of information which is very, very hard to protect.

ZYSMAN: Yeah, but the FBI agents can get together a lot of information, which is then very powerful at the Office of the U.S. Special Trade Representative.

What kind of victory can that information bring in the long term?

ZYSMAN: There’s a lot of money for each generation of product as the U.S. government negotiates with other countries about antipiracy efforts.

WEBER: Or it could shift countries like China to alternative product lines, like Linux.

WEBER: If the price of the Microsoft operating system goes from $2 for a pirated copy to $89, that’s a big difference, when you can download Linux for free. The indirect effect is that there are a lot of people in the Chinese government who believe Micro-soft is part of an overall U.S. attempt to link China to the world economy in a way that benefits U.S. producers. Some of this is paranoia, some is not.

WEBER: China has this added political dimension, but the economic argument holds in the rest of the world. The next generation of computer scientists, trained in places like Bangalore, are training on Linux, which universities can have for free.

WEBER: In one sense they do. There have been internal Microsoft documents leaked about the threat from free software. In another sense, they don’t: one of the vice presidents made an absurd statement about how free software would undermine innovation in the knowledge economy. Linux has been one of the fastest-innovating systems out there. The official perspective of the company has been: no, they don’t get it.