In California, Software Piracy is Hurting Companies and State Economy

By January 31, 2012
Keywords : Smart city, America
piracy sign on top of dollars

With some countries reaching almost an 80% piracy rate for software, California is being confronted with a major economic threat that is impacting jobs, revenues, investments and taxes.

With most IT and software companies settled in California, those industries have been a major driver for the State economy, which in turn faces directly the impact of software piracy. The Orange County Business Council says the cost of intellectual property theft reaches a $1,6 billion loss in economic activity and $700 million in tax revenues in 2011. Over the past decade 400 000 manufacturing and IT jobs were destroyed. The strong concentration of tech companies in California has led to the State being dependent on those industries for job creations and investment: businesses are now calling for the State leaders to take a closer look and find solutions to slow down this phenomenon, by raising their awareness about the economic impact of piracy on both sides.

Raising the State’s awareness

Developing countries often have high software piracy rates that can reach up to 80% of the market. By preventing them from scaling major markets and selling their licenses in dynamic and fast growing economies, piracy has strong consequences on tech companies’ revenues: their investment capacity decreases, impacting negatively job creation and retention along with innovation. This problematic therefore concerns the entire economic environment, including the Californian government – less value is created in the State, there are wage losses for workers and fewer job created. As the Californian economy is heavily relying on IT and software industries, business leaders are working to raise government awareness about this issue, stressing the fact that decreasing piracy would benefit California. Companies are now looking for the Californian government to protect their intellectual property and find legal solutions.

Decreasing piracy for a more dynamic economy

The Orange County Business Council released numbers showing that if piracy was to be reduced by 10% over the four next years, it would create more than $4 billion in economic activity and add $660 million in tax revenues for the State. If it was reduced by the same percentage in the two coming years, those numbers would be respectively $5.7 billion and $880 million. The link between tech companies and the Californian government leads to those two sides needing to work together to fight the piracy issue, which consequences go way beyond the companies efficiency, impacting economically the whole region.


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