Mod chips are gray-market add-ons that, once soldered to a console's main circuit board, defeat security systems and enable the machine to run legally and illegally copied discs, import games and homemade software.
According to a report in The Sydney Morning Herald, Ballmer said late last week that the company could remove the Xbox from the Australian market if Australia's legal system does not provide appropriate protections. Ballmer made the comments at an Australian event to promote a new PocketPC device, The Herald said.
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