The world's largest software company has launched a high-level campaign against the one factor it fears could threaten its market dominance: pirated copies of its own products.

Users of Microsoft products are to face spot-checks of the authenticity of their software before they are allowed to download updates.

Microsoft accounts for more than 90 per cent of the desktop software market, leaving little scope for expansion. But it is estimated that as many as a third of all Windows products being used are pirate copies, from which Microsoft receives no revenue.

According to the Business Software Alliance, the cost of pirated software in the UK to national and international software publishers is valued at over £1 billion.

From today, when a computer user starts to download updates, a program, called Windows Genuine Advantage, will scan the machine to see if it’s running a valid version of Microsoft's Windows platform.

After prompting customers that their operating systems need to be authenticated, the program will scan the computer, detecting the product number automatically.

If the program detects a counterfeit copy, it will offer two options. Customers who fill out a piracy report, provide proof of purchase and send in the counterfeit CDs, will get a free copy of Windows.

Those who simply submit a piracy report, giving details of when, where and from whom the operating system was purchased, and send in the counterfeit copy, will get Windows at half price.

The authentication process, optional until Monday, will in future be required for all software updates except security patches.

Microsoft also faces competition from the growing popularity of open source platforms, such as Linux. The company has identified opportunities to grow its business by increasing the number of PCs per household and by focusing on emerging markets.

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