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Microsoft in its latest annual report filed with Securities and Exchange Commission USA has accused open source vendors and community of stealing its ideas and benefiting from its intellectual property.

The report cites a number of challenges presently faced by Microsoft and one of them includes open source community which it says benefits from all the research it does in software and development.

According to the report:

Our business model has been based upon customers paying a fee to license software that we develop and distribute. A number of commercial firms compete with us using an open source business model by modifying and then distributing open source software to end users at nominal cost and earning revenue on complementary services and products. These firms do not bear the full costs of research and development for the software. Some of these firms may build upon Microsoft ideas that we provide to them free or at low royalties in connection with our interoperability initiatives.

The report also said that open source software vendors and communities are devoting considerable efforts to developing software that mimics the features and functionality of their products. Not only that they are developing inferior copies of its applications and selling them at a lower price thus depriving Microsoft of revenue.

Apart from OS community other challenges faced by Microsoft as mentioned in that report are legal proceedings, software piracy, software security and bankruptcy of major distributor which results in sales channel disruption.

To read full report click here.