Compromised Windows PCs bought in China pose risk to U.S.

Counterfeit versions of Windows running on Chinese PCs do more than take money from Microsoft's pocket, they also pose a security threat to U.S. companies and consumers, experts say.

Microsoft has launched an anti-piracy campaign highlighting the risk posed by Windows knockoffs to discourage potential Chinese buyers. After purchasing 169 PCs with bogus copies of Windows, Microsoft found that more than 90 percent contained malware, such as keyloggers and spyware, or deliberate security vulnerabilities.

Statistically, Microsoft's sample doesn't provide enough information to draw a conclusion on the percentage of such compromised PC in China. However, there's little doubt on the economic damage caused by counterfeit software. The Business Software Alliance pegs the value of the illegal software market at $9 billion in China versus $2.7 billion for the legal market.Ã'Â

Beyond the financial impact on Microsoft, PCs compromised through bogus copies of Windows oftentimes end up as zombies within botnets used to spread spam and malware outside of China, including the U.S., experts say.

"Compromised PCs running unpatched versions of pirated copies of commercial operating systems are routinely used in DDoS [distributed denial of service] and other botnet abuses," said Neal Quinn, chief operating officer of Prolexic. "It happens in many countries, not just China."

[In depth: The botnet hunters]

Chinese cybercriminals would unlikely build domestic botnets, because of the performance problems that would arise from the Chinese government filtering all Internet traffic coming in and going out.

"One defensive advantage we have here is the Great Firewall," said Andy Ellis, chief security officer for Akamai.

However, compromised systems exported to other countries, such as Thailand, South Korea, Malaysia and Vietnam, would make good botnet candidates, said Dan Olds, an analyst for Gabriel Consulting Group.

In September, Microsoft took down a major botnet that used malware distributed through counterfeit Windows in PCs built in China and sold in stores in and outside the country. The Nitol botnet spread malware that included keyloggers, rootkits and Trojans. The Nitol malware also was found in the latest PCs bought by Microsoft.

The threat also goes beyond Windows. It is not unusual for crooks in China to sell counterfeit Office with Windows as a package, adding another layer of malware or intentional vulnerabilities.

PC sellers often take the illegal software, because the deal offered by criminals is too good to pass up. Rather than buy a legitimate copy of Microsoft software, they often get the bogus version for free and are sometimes even paid to carry it. "The choice gets pretty obvious," Olds said.

Where compromised systems resides mean little to people running botnets, since the malware within the PCs can be controlled through a server in any location, said Mary Landesman, a senior security researcher at Cisco. Spreading a botnet across multiple countries makes it more difficult for law enforcement to take the network down.

"There's no benefit to an attacker to have all of the machines [in one country]," Landesman said. "In fact, it's to their detriment to have all of the machines located in the same physical locale."

Read more about application security in CSOonline's Application Security section.

Join the CSO newsletter!

Error: Please check your email address.

Tags applicationsAccess control and authenticationcounterfeitsoftwarebotnetdata protectionbusiness software allianceBSAMicrosoft WindowsMicrosoftsecurityData Protection | Application Security

Show Comments

Featured Whitepapers

Editor's Recommendations

Solution Centres

Stories by Antone Gonsalves

Latest Videos

  • 150x50

    CSO Webinar: Will your data protection strategy be enough when disaster strikes?

    Speakers: - Paul O’Connor, Engagement leader - Performance Audit Group, Victorian Auditor-General’s Office (VAGO) - Nigel Phair, Managing Director, Centre for Internet Safety - Joshua Stenhouse, Technical Evangelist, Zerto - Anthony Caruana, CSO MC & Moderator

    Play Video

  • 150x50

    CSO Webinar: The Human Factor - Your people are your biggest security weakness

    ​Speakers: David Lacey, Researcher and former CISO Royal Mail David Turner - Global Risk Management Expert Mark Guntrip - Group Manager, Email Protection, Proofpoint

    Play Video

  • 150x50

    CSO Webinar: Current ransomware defences are failing – but machine learning can drive a more proactive solution

    Speakers • Ty Miller, Director, Threat Intelligence • Mark Gregory, Leader, Network Engineering Research Group, RMIT • Jeff Lanza, Retired FBI Agent (USA) • Andy Solterbeck, VP Asia Pacific, Cylance • David Braue, CSO MC/Moderator What to expect: ​Hear from industry experts on the local and global ransomware threat landscape. Explore a new approach to dealing with ransomware using machine-learning techniques and by thinking about the problem in a fundamentally different way. Apply techniques for gathering insight into ransomware behaviour and find out what elements must go into a truly effective ransomware defence. Get a first-hand look at how ransomware actually works in practice, and how machine-learning techniques can pick up on its activities long before your employees do.

    Play Video

  • 150x50

    CSO Webinar: Get real about metadata to avoid a false sense of security

    Speakers: • Anthony Caruana – CSO MC and moderator • Ian Farquhar, Worldwide Virtual Security Team Lead, Gigamon • John Lindsay, Former CTO, iiNet • Skeeve Stevens, Futurist, Future Sumo • David Vaile - Vice chair of APF, Co-Convenor of the Cyberspace Law And Policy Community, UNSW Law Faculty This webinar covers: - A 101 on metadata - what it is and how to use it - Insight into a typical attack, what happens and what we would find when looking into the metadata - How to collect metadata, use this to detect attacks and get greater insight into how you can use this to protect your organisation - Learn how much raw data and metadata to retain and how long for - Get a reality check on how you're using your metadata and if this is enough to secure your organisation

    Play Video

  • 150x50

    CSO Webinar: How banking trojans work and how you can stop them

    CSO Webinar: How banking trojans work and how you can stop them Featuring: • John Baird, Director of Global Technology Production, Deutsche Bank • Samantha Macleod, GM Cyber Security, ME Bank • Sherrod DeGrippo, Director of Emerging Threats, Proofpoint (USA)

    Play Video

More videos

Blog Posts

Market Place