Think of a world in which, instead of shipping binary executable code to users, we shipped them full source code. They'd be able to go in and selectively edit out the "licensing" stuff, remove the lines where the app dials home, etc.
This is actually the world we live in, but we call this source code "executable code". Now we pretend that executable code is "obfuscated" or "cryptic" or "difficult to understand" but that's just so we can keep our sanity. Executable code is transparently open, well documented, and perfectly editable on any major OS, including Win and *nix, regardless of what sort of checksums or digital signing you do to ensure local files haven't been changed, all the security experts in the world can't put Humpty Dumpty back together on the client side, or keep him from shattering to a million pieces in the first place.
I don't know a single person who has legal copies of Office or Photoshop that didn't come free and I've lived in the UK and live in Canada.
What MSFT has done in the Western world is to ensure that companies (who can afford to pay) can't have pirated copies. Essentially this is because corporations can be sued at the drop of an envelope. I somehow don't think China has the ease in filing suits for small amounts against companies.
Downsides? Not as much discovery (don't expect the court to force the company to do a software audit), and low damage (think money back, but no outrage).
No, I'm not a lawyer, and this isn't advice.
Seems like there's no way Google Apps could have unauthorized users precisely because you do need to login to their servers.
There advantages to having Office installed locally, but surely this is a big enough problem to change how things work. 90% is a lot.