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Friday, 27 October, 2000, 15:19 GMT 16:19 UK
How badly hurt is Microsoft?
Microsoft's computer network has been broken into by hackers who gained access to the "source code" of some of its software.

BBC News Online's Iain Rodger explains the significance of this huge embarrassment for the world's leading software producer.

The possibility that source code, or programming blueprints, might have been stolen or tampered with by hackers could hardly be more serious for Microsoft.

The source code for its prodigious Windows and Office software has been jealously guarded by Microsoft, which treats it as highly valuable intellectual property.

What is the source code?

When programmers write computer programs, they write a series of commands that define how the program operates.

These commands are written in a programming language, such as Java.

When the commands are completed and saved into a file, the file is said to contain the source code for the program.

Before the program can run on a computer, the source code is converted by a compiler into what is known as object code.

The object code contains the series of instructions in a form which can be understood by a computer's processor but is indecipherable to people, and therefore secure.

Clearly, the source code can be seen as the key information concerning any piece of software, revealing how it works and where its strengths and weaknesses lie.

How can the code be misused?

Potentially, the source code could be used to produce bootleg copies of Microsoft software, perhaps boasting "improvements", or modifications to make it work with hitherto incompatible systems.

Microsoft has long endured traditional software piracy, especially in developing countries.

But anyone trying to do this would soon find themselves in court facing stiff penalties.

On the other hand, malicious hackers could use the code to refine viruses, making their attempts to infiltrate and damage computer systems much more effective.

This is a clear possibility, if Microsoft source code has indeed been stolen and were to fall into such hands.

The code could also be useful to Microsoft's competitors, helping them to see how to modify their own products to their advantage, or giving them inside information on how Microsoft is preparing for the next generation of multi-platform software.

But it is extremely unlikely that any competitor would sanction such an attack on Microsoft.

What do the hackers hope to gain?

Computer security experts have suggested that the most likely reason for the hack attack is to embarrass Microsoft, or perhaps to hold the source code hostage.

If the code was to be released anonymously on the internet, the jack could never be put back in the box.

There are plenty of opponents to Microsoft's dominance of the PC software market who would like to see the firm adopt an open source policy.

This would mean that anyone could have access to the source code and suggest improvements, for the benefit of all.

A rival to Microsoft's operating system, Linux, has been developing along these lines.

Open source

Open source advocates say product development is quicker because a greater number of programmers work simultaneously on fixing bugs and compatibility problems, and on expanding the software's capabilities.

Opponents say the code should be protected because it is the essence of what differentiates their products from their competitors', and is therefore the basis of what they have to sell.

Revealing Microsoft's source code to competitors was one of the "remedies" suggested by the judge in the firm's anti-trust case, when it was found guilty of abusing its dominant position in the PC software market.

However, although Microsoft has shared some of its code with partners under strict contractual agreements, it has consistently opposed an open source policy.

For now, there is too little information about exactly what the hackers have done to be sure about the consequences of the security breach.

But one thing is clear: if the hackers intended to embarrass the company, they have certainly achieved their aim.

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