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. So Microsoft is using technological 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? Bill 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?

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 valued-added services–and that’s only one.

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

WEBER: There are a whole bunch of Unix derivatives, but Linux is most popular. 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.

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

WEBER: Or, it arguably could shift countries like China into 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 Microsoft 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, being trained in places like Bangalore, are being trained on Linux, which universities can have for free.

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