The Year of Spyware

By James Martins

Prior to the past year, spyware was a term that could refer to almost anything Internet-related (from innocuous cookies and applets to keyloggers and hacker exploits) and was largely unaddressed.

By April 2004, the Federal Trade Commission (FTC) and the U.S. Congress managed to define spyware as “software that aids in gathering information about a person or organization without their knowledge and which may send such information to another entity without the consumer’s consent, or asserts control over a computer without the consumer’s knowledge” and as early as January in the past year, various bills aimed at curtailing spyware were being drafted by the U.S. Congress, and some were passed into law as late as October in the year.

Many spyware companies cleverly evaded legislation while making their products more resistant to removal. Spyware remained a growing problem which routinely annoyed computer users. Some spyware install unwanted toolbars, display pop-up ads, modify system files, change security zone settings, change browser home pages, record and transmit user keystrokes to unknown third parties.

While free anti-spyware products such as Spybot Search & Destroy and Lavasoft Inc.'s Ad-Aware helped in remedying the situation, companies marketing their anti-spyware products exacerbated the problem: by realizing that their business model wasn’t naturally watertight, many resulted to coaxing customers into purchasing their software.

The FTC, in response to this development, filed a case in October 2004 against Seismic Entertainment Productions Inc. and SmartBot.Net Inc., accusing the companies of secretly installing unsolicited software on computers, causing systems to be overwhelmed by pop-up advertisements, and then sending them alarming messages saying they needed to buy "Spy Wiper" or "Spy Deleter" for $30.

Other anti-spyware companies have taken subtler approaches. For instance; install Computer Associate's eTrust PestPatrol (version 5.0.0.0, DAT versions 9/22/2004 was used in our tests), a popular anti-spyware product, on a new computer with a fresh installation of Windows XP Home (Version 2002 SP1 was used in our tests), make sure you have opened Microsoft internet explorer at least once previously (you may need to complete the Internet Connection Wizard but you do not need to connect to the Internet), then direct eTrust PestPatrol to run a scan for spyware and it will surely find “pests” on the brand new unconnected computer. In fact in our tests it found two with one labeled “System Spy”. Such scans are usually the basis for fallacious claims by anti-spyware companies that 9 out of 10 Internet-connected PCs are infected with spyware which in turn spreads more fear, uncertainty and doubt.

Industry analysts at IDC and Wachovia Securities expect the anti-spyware software market to grow from the current US$90 million to US$305-US$400 million by 2008. Already security software behemoths McAfee and Symantec have included anti-spyware solutions to their range of products. Other heavyweights such as Yahoo, EarthLink and much recently, Microsoft, have stepped into the market.

In particular, Microsoft’s entry into the anti-Spyware business may have sounded the death knell for smaller anti-spyware companies whose main clientele; the desktop/consumer market, may prefer Microsoft’s offering since it is widely expected that Microsoft’s anti-spyware solution will be superior and more candid.

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