This paper evaluates the nature, relative incidence and drivers of software piracy. In contrast to prior studies, our study is based on direct observation of piracy, focusing on a specific product – Windows 7 – which was unambiguously associated with a significant level of private sector investment. Using data passively created by users (i.e., data that is transmitted to Microsoft as part of using the product), we are able to characterize the ways in which piracy occurs, the relative incidence of piracy across different economic and institutional environments, and the impact of enforcement efforts on choices to install pirated versus paid software. Our preliminary findings highlight a number of striking findings: (a) the “sources” of piracy are quite concentrated insofar as the vast majority of “retail piracy” can be attributed to a small number of widely distributed “hacks” that are available through the Internet, (b) the incidence of piracy varies significantly with the microeconomic and institutional environment (e.g., piracy is declining in GDP per capita but increasing in countries with stronger legal infrastructure), and (c) piracy has a complicated relationship with elements of the supply chain and IT environment. Finally, taking advantage of country-specific enforcement efforts against suppliers of pirated software such as the Pirate Bay, we are able to demonstrate the impact of enforcement efforts against software piracy on the choice by users between pirated versus paid software.