Research: Spyware industry worth billions

Webroot's report on the spyware epidemic indicates that the malicious applications are attracting a growing share of online ad spending.

Despite reductions in the number of computers infected by spyware applications, the troublesome software has created a billion-dollar industry that continues to plague both consumers and businesses, researchers said on Tuesday.

According to the State of Spyware Report, issued by security software maker Webroot, the number of computers infected with spyware applications remains relatively high despite growing awareness of the epidemic and modest success in controlling it. Webroot's independent research and data gathered by its Spy Audit service, which uses software designed to look for spyware, showed that 88 percent of the consumer machines in the study harbored some form of unwanted program during the first quarter of 2005.

Among businesses, Webroot found similarly overwhelming results, with spyware on 87 percent of all the corporate PCs it studied. Despite the staggering number of computers infected by spyware, Webroot said, the infection rate actually has diminished since 2004, when the software maker found an average of almost 28 spyware programs on each PC it scanned during the first quarter.

"Clearly there's a growing awareness of the spyware issue, but that has not translated into any kind of rapid decline in the programs," said David Moll, chief executive of Webroot. "When you see the lawsuits, legislation and other forms of attention being given to spyware, there's reason to hope the situation will improve, but people need to take an aggressive approach to fighting it if real progress is going to be made."

Moll cited the anti-spyware lawsuit filed last week by New York Attorney General Eliot Spitzer against Web marketer Intermix Media. Success in that case, Moll said, could increase scrutiny and pursuit of people and companies distributing the tools. However, he noted that there also is a need for more centralized industry efforts and better legislation regarding spyware from the U.S. government.

Spyware is a general term used to describe software programs that are secretly deposited on computers to track Internet usage, launch advertising programs or steal users' personal information. Among the most popular of these programs are adware, keystroke loggers and so-called system monitors.

In addition to remaining a major threat to personal and business security, Webroot said, spyware applications--specifically the types that generate pop-up advertisements, hijack home pages, redirect Web searches and use so-called DNS poisoning to steal Web traffic--generate an estimated $2 billion in revenue annually. Based on statistics published by the Internet Advertising Bureau, spyware could represent almost 25 percent of the entire online advertising industry.

The growing number of spyware attacks crafted expressly for making money, rather than for tracking Web use for marketing research or other purposes, is another emerging problem, Webroot said. The report contends that spyware exploits have "crippled" some businesses, particularly financial-services companies, in some cases by stealing customer data. Spyware infection also has slowed the growth of e-commerce by eroding consumer trust in online security.

"We can hope that the advertising industry will provide some help in trying to root out the truly malicious forms of spyware, but as long as there is an attractive return on investment on this activity for some people, this isn't going to stop anytime soon," Moll said.

Webroot said that adware continues to be the most pervasive form of spyware, with more than 50 percent of all business computers, and almost 60 percent of consumer machines, running some form of the programs. Of the devices already infected with the advertising applications, each machine averaged nearly seven different forms of the programs, according to the research.

The security software maker worked previously with Internet service provider EarthLink to generate its spyware statistics, but Webroot representatives said that relationship has ended. No details were available on the reasons for ending the partnership.

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