Rogue Software’s Past and Present — Is the Grey Industry a Thing of the Past?

Issue 26,By Dong Xing,[Copyright]

Editor’s Note: By October 30, Hong Lei, the author of the Tomato Garden, will have been in detention for 76 days. Hong’s detention is because he acquired an illegal interest by bundling rogue software into pirated software copies. Hong’s case has caused a huge disturbance in the software industry and, once again, brought rogue software into the eye of the storm.

Before rogue software emerged, everyone working in the Internet business was concerned about how to generate revenue.

As BBS were still popular, Internet operators often inserted advertisements into BBS or websites and charged advertisers by the volume. This business mode is still in use today. However, it has a disadvantage: it is restricted by popularity. In the 2006 recording, Hong analyzed the relationship between advertisement types and clicks and concluded “it seems hard to tell what makes money now, but, I feel that to become bigger, we should mostly try to gain more popularity and attract more users.”

However, most of the Internet online traffic flowed to large BBS such as Mop.com or Tianya.cn, or web portals such as Sina.com.  The remaining and numerous small or medium-sized websites could do nothing to make money, but had to pay the expensive server trust charge. At the time, eBusiness had just emerged and online games had just taken shape. Being “hurt” by those new Internet upstarts like Ma Yun or Chen Tianqiao, numerous people began to dream of suddenly getting rich with the Internet. Then, rogue software came to the foreground.

Opinions vary on the definition of rogue software. It was not until the end of 2006 that the Internet Association of China (IAC) met to finally put forward a belated definition: Rogue software means software that, without notifying or being authorized by the users, installs and runs itself on computers or other terminals of the users, excluding computer viruses under Chinese laws and regulations. When this definition was developed, rogue software had almost disappeared from the Internet arena.

The “Internet Assistant” of 3721.com was regarded by many as the first rogue software. It was also identified as No. 1 on the list of the “Top 10 Malware of China” by the Union of Network Beijing in 2005. However, as Li Guoxun, an insider journalist investigated and found that 3721.com, Baidu.com, and Taobao.com first used the “association of websites” as a business mode in 2003 and turned themselves into camps for rogue software, allowing this “cancer” to grow bigger.

The so called “association of websites” is a method of promotion where a large website develops an association with small and medium websites so that the former is able to embed its products, services, and/or advertisements into the latter‘s main pages and pay for the number of clicks on the embedded products, services, and/or advertisements. It was welcomed by those website owners who did not know a way out. However, it also brought cheaters who “produced” more clicks to gain more profits. At the time, the most widely used cheating method was to use malicious codes to force users to set the websites being promoted as their homepages.

The Internet was developing fast. As website navigation was in fashion for some time, many well-known websites also developed their own navigational plug-ins for user terminals. Their plug-ins were not compatible with each other because they were targeted towards similar communities and contained similar functions. To compete, 3721.com first included in its plug-in certain programs (which were later judged to be “malicious”) that would uninstall other plug-ins, prevent uninstalling by other plug-ins, and install themselves automatically. It soon had many followers, and many more newcomers also entered this field of battle.

Everyone was competing for the users’ computers. After a few rounds of this plug-ins war, what remained of the users’ computers were systems filled up with program waste and loopholes, or even system crashes or breakdowns. All this was because the users had opened a few websites before they knew it.

This malicious competition continued. In the recording, Hong disclosed that 3721.com once came to him and wanted its plug-in to be bundled with the Tomato Garden version of Windows XP. “They just wanted to have a look at the result,” said Hong. Soon, Netease.com also approached him. At last, Hong chose to cooperate with Yahoo Assistant and Netease.com.

In addition to Hong and other creators of pirated software, many shareware or freeware authors may have received similar offers. Those authors have long been embarrassed that their popular software does not make money, because the users have long been accustomed to piracies and cracks. An author can use his or her freeware to occupy the computers of millions of users. However, upon any attempt to charge for his or her freeware, he or she will see a message – “your software has been cracked.” Lu Jin, the author of WOPTI Utilities, a professional system optimizer, proved this with his own personal experience.

There must be a way out for those embarrassed authors. Now, with supply and demand, a market has formed and prospered with no restrictions. In his report “Rogue Software Profits from Being Mean”, Li Guoxun said that because of the lack of regulation and the participation of many large companies, rogue software, as a grey industry, has grown to be worth hundreds of millions of USD. Hundreds of companies lived on various plug-ins, and some “formal” ones received millions of USD annually.

“The installation quantity, or how many computers are penetrated by rogue software, is used to show our performance,” said a person in the plug-ins industry to Li Guoxun, “A large company may have over 20 million computers, and a small one, like my company, may have around 1 million computers. When asked, what we do is very simple. We use background applications to continuously pop up windows on the users’ computers.”

For users, whatever software they install, they will be forced to accept many plug-ins that cannot be removed; whenever they open a browser, pop-ups will come in incessantly. They totally lose control over their computers. Coupled with system failures due to the incompatibility between plug-ins, even patient users could not stand it anymore.

In 2006, the non-governmental Anti-Rogue Software Association (ARSA) was created uproariously. It announced its purpose to represent the interests of all Internet users and declared a war against rogue software. Its formal opponents included Zhongsou Plug-in, Yahoo Assistant, OK Secretary, Eachnet Toolbar, and dudu accelerator, which were among the Top 10 Malicious Rogue Software mentioned above. Within one month after its creation, it filed continuous lawsuits against the producers of these rogue software in Beijing, Shanghai, Chongqing, and Jinan.

ARSA lost most of the cases because of the absence of a legal basis for the lawsuits, but they won their lawsuit against Shanghai OK Information Technology Company Ltd. for the OK Secretary program in both the first and second instances.

A recent investigation by Li Guoxun found that this OK Company behind the “OK Secretary” program and compared it to a “giant grey crocodile” in the rogue software industry. As reported, it was created two years ago and has been formally operating for three months.  However, those three months have generated a profit of nearly 20 million Yuan. Their core product is the so called “contextual advertisement”; they install the OK Secretary program into the users’ computers by bundling it with a variety of other software. Whenever the victimized user goes online and searches, regardless of which search engine he or she may use, the pop-up ads related to the key search word would appear at the bottom of the screen.

The Shanghai No. 1 Intermediate People’s Court finally decided that OK Secretary infringed upon the consumers’ rights of property, information, and choice; and the OK Company was enjoined from producing and disseminating OK Secretary, apologize, and pay for the damages. The judgment has since been implemented by the OK Company.

This litigation war by ARSA has continued to intensify. ARSA brought China Internet Network Information Center (CNNIC) to court and lodged a complaint with the Ministry of Information Industry against China Telecom for misuse of rogue software.

At the same time, mass media reports have also brought more attention to rogue software. For a time, everybody on the Internet seemed to be yelling “kill it!”  For fear of being negated, those companies showed up to declare their positions. Some stated that their products were not rogue software. Some made formal apologies and revoked or modified their software. Some withdrew privately to allow their software to disappear from the Internet.

With the active cooperation of those creators, this chaotic and noisy war against rogue software ended peacefully after one year. ARSA also announced that “the phenomenon of rogue software has been fundamentally contained” and it would next target “rogue websites” which steal netizens’ information by distributing false information or using Trojan Horse programs.

It is worth noting that after leaving 3721.com and Yahoo China, Zhou Hongyi, the former Chairman of 3721.com, has since become chairman of a company specializing in anti-rogue software. Zhou was deemed to be one of the creators of rogue software and a “big rogue.” He admitted that he wants to make up for the past, because he opened up Pandora’s Box.

Now, rogue software has become a thing of the past. However, the industrial chains of the grey industry have kept on emerging and growing in various forms. Li Guoxun told China IP that when rogue software ended, most of the plug-ins were regulated. Internet cheating has now includes the Internet Hitman, Virus Marketing, Trojan Horse, Psoriasis, and Commercial Fraud, which are hard to defend effectively.

At the end of 2007, when talking about the Internet, Xie Wen, an Internet veteran and the former CEO of Hexun.com said, “the usual phenomena in Zhongguancun’s IT markets, Yiwu’s commodity markets, the Silk Road, or the advertisement field can now be found on the Internet. They are threatening to become the mainstream. For example, we may together do something in the dark against someone. For another example, we may form a whole chain of a rogue industry, so that the companies, the individuals, and the downstream markets each have their own rogue ways. The Chinese Internet companies are being eroded, to be more ‘Chinese-characteristic’.”

 (Translated by Ren Qingtao)

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