Business 2.0: Invasion of the Corporate Spyware

By Michael Myser, March 2005 Issue

If spam was the corporate horror flick of 2004, then spyware is 2005's sequel -- infiltrating computers, deluging them with viruses, and tracking behavior. Though the software has plagued home PCs for nearly five years, it's now so complex that even IT departments can't combat it. That's a major problem, because not only does spyware slow down corporate networks, but it can also gather sensitive company information -- anything from user logins to customer data. "Spyware is a very ugly issue for companies," says Rich Mogull, a research director at Gartner. "It's high on their lists of problems."

The number of spyware programs grew 25 percent in 2004 and is on track to surpass that this year, says Eric Howes, a spyware researcher at the University of Illinois at Urbana-Champaign. Even worse, spyware makers are getting sneakier, constantly modifying existing programs to avoid detection.

But what's bad for most businesses will be great for spyware fighters. According to IDC, the market for products that combat spyware will swell to $106 million this year, up from a meager $12 million in 2003. Meanwhile, a crop of upstarts are vying to dominate the space. Boulder, Colo., startup Webroot Software just secured $108 million in venture funding, and it faces heady competition from Sunbelt Software of Clearwater, Fla., and Sweden's Lavasoft, whose offerings scan corporate networks and purge spyware remotely. Hardware is another approach: Silicon Valley's Blue Coat uses appliances that catch spyware at the Web gateway. Computer Associates (CA) and Microsoft (MSFT) are also getting into the game, with acquisitions of PestPatrol and Giant Company Software. Soon, antivirus veterans McAfee and Symantec will likely snatch up some anti-spyware vendors too. As for who will come out on top, that will have to wait until the box-office numbers roll in.

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