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What happened?
On its official Windows blog, Microsoft (NASDAQ:MSFT) has announced that it will develop a new version of Windows 10 that is optimized for China. The company has entered into a joint venture to license, deploy, and manage the new version for China's government agencies and state-owned enterprises. Microsoft will also handle ongoing support for these agencies.

The joint venture is being formed with the China Electronics Technology Group, or CETC, which Microsoft partnered with in September, and will be called C&M Information Technologies. C&M will serve important sectors like energy, telecommunications, and transportation. C&M will be the exclusive licensor of a government-approved version of Windows 10 to government and state-owned enterprise customers. The joint venture will also handle activation, patch management, deployment, and product support, all while collecting feedback for future updates.

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Does it matter?
Microsoft's announcement is important because it shows that Microsoft is making progress with fighting piracy in China, which has long been a huge weakness for Microsoft in The Middle Kingdom. Software piracy, including Windows and Office, is so rampant that even government agencies and state-owned enterprises in China commonly use unlicensed versions.

By developing a new version catered to the Chinese government's needs, Microsoft can finally start to tap the massive Chinese market in a meaningful way. At the same time, the government agencies and state-owned enterprises are now putting a greater emphasis on security, and they can get better support from Microsoft in this department if they actually pay for the software.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.