Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 210

Cybercrime response may slow internet

In mid-April, the 'Shadow Hackers' online group made public some malicious software that had been stolen from the US government’s National Security Agency. A month later, 'ransomware' dubbed WannaCry that incorporated the bugs pilfered from US intelligence penetrated perhaps 300,000 computers running outdated Microsoft software in an estimated 150 countries.

While that might well be the most chilling cyberattack ever, it’s perhaps not the most significant because hackers have tried to influence elections, most notably the US election last year. While it will never be established how much the hacked emails from Hillary Clinton’s campaign helped Donald Trump, it’s apparent that cybercrime is all too common. It is already a US$1 trillion-industry worldwide, according to some estimates.

Nothing is safe on the internet

Whatever the true figure, identification theft, fraudulent online transfers, payment-card frauds, network assaults, denial-of-service attacks by malicious networks of computers (botnets), ransomware, cyberbullying, trolling and online child pornography are too common. They show that nothing is safe on the internet – apart from criminals, it seems.

If people, businesses, governments and other bodies including hospitals can’t trust the internet to protect data, share files, host websites, seamlessly send and receive messages and make payments, an internet slowed by protections and precautions could assume a lower profile in everyday life – or fall well short of its potential anyway. To maintain the public’s trust in the internet, policymakers are making cybersecurity a top priority while an industry has sprung up to protect cyberspace. It will be a never-ending battle.

To be sure, billions of interactions happen every day on the internet without hassle. A cyberattack is yet to trigger a catastrophe. Firewalls, virus antidotes and sophisticated behavioural defences help protect systems. The payments companies have never suffered a significant breach. Neither have the big digital-platforms. That may not last. The core problem is that the foundations of the internet are insecure. After all, they were designed to allow a few trusted parties to communicate, not billions worldwide.

Fragile and flawed

Amateur hackers were around in the early days of computers. Nowadays, cybercriminals operate in sophisticated packs. Thanks to technological advancements that allow for mass criminal activity while protecting anonymity, cybercrime is lucrative, hard to detect and even harder to prosecute.

Government, businesses and households are taking cybersecurity more seriously with each attack. The major responsibility for keeping the internet safe, however, lies with the operating system developers such as Apple, Google and Microsoft.

Microsoft software products include Windows XP, the model that WannaCry exploited. As is typical, Microsoft puts a finite life on its software versions because software is costly to update and patch.

Despite the negligence of enterprises that still use Windows XP while refusing to pay for support after its ‘end of life’, in the aftermath of the WannaCry attack, Microsoft stood accused of holding back on issuing a free repair for Windows XP that could have protected users.

Critics suggest that Microsoft would have provided support if not for its profit motive to sell software patches, and that it has an incentive to avoid providing security updates on old software, to force people to buy the latest versions. A bugbear for many people is that companies such as Microsoft bear little or no responsibility under US law if their software is vulnerable to attack.

Invisible but lethal

While governments are giving greater priority to cybersecurity, the most likely catastrophic assault on the internet is by a state-sponsored cyberwarfare attack.

Rogue governments are adept at cyberattacks, and cyberwarfare is likely to be a never-ending arms race. Democratic governments need to develop cyberwarfare technology to gather intelligence to protect their populations. The more weapons they create the more insecure adversaries feel, which prompts them to step up efforts. Another quandary is that intelligence agencies must decide whether or not to warn software manufacturers about flaws in their code. If they inform software makers (and they often do), intelligence agencies risk making worthless their cyberweaponary edge. Another concern is that cyberweapon technology is easy to steal.

Such are the unending challenges of guarding the internet against the next WannaCry.

 

Michael Collins is an Investment Specialist at Magellan Asset Management. Magellan is a sponsor of Cuffelinks.

 

RELATED ARTICLES

How I lost my files to ransomware

Ransomware threatens home, office and national security

The shift to the cloud

banner

Most viewed in recent weeks

Finding the best income-yielding assets

With fixed term deposit rates declining and bank hybrids being phased out, what are the best options for investors seeking income? This goes through the choices, and the opportunities and risks involved.

What history reveals about market corrections and crashes

The S&P 500's recent correction raises concerns about a bear market. History shows corrections are driven by high rates, unemployment, or global shocks, and that there's reason for optimism for nervous investors today. 

Howard Marks: the investing game has changed

The famed investor says the rapid switch from globalisation to trade wars is the biggest upheaval in the investing environment since World War Two. And a new world requires a different investment approach.

Welcome to Firstlinks Edition 605 with weekend update

Trump's tariffs and China's retaliatory strike have sent the Nasdaq into a bear market with the S&P 500 not far behind. What are the implications for the economy and markets, and what should investors do now? 

  • 3 April 2025

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

World's largest asset manager wants to revolutionise your portfolio

Larry Fink is one of the smartest people in the finance industry. In his latest shareholder letter, the Blackrock CEO outlines his quest to become the biggest player in private assets and upend investor portfolios.

Latest Updates

Investment strategies

An enlightened dividend path

While many chase high yields, true investment power lies in companies that steadily grow dividends. This strategy, rooted in patience and discipline, quietly compounds wealth and anchors investors through market turbulence.

Investment strategies

Don't let Trump derail your wealth creation plans

If you want to build wealth over the long-term, trying to guess the stock market's next move is generally a bad idea. In a month where this might be more tempting than ever, here is what you should focus on instead.

Economics

Pros and cons of Labor's home batteries scheme

Labor has announced a $2.3 billion Cheaper Home Batteries Program, aimed at slashing the cost of home batteries. The goal is to turbocharge battery uptake, though practical difficulties may prevent that happening.

Investment strategies

Will China's EV boom end in tears?

China's EV dominance is reshaping global auto markets - but with soaring tariffs, overcapacity, and rising scrutiny, the industry’s meteoric rise may face a turbulent road ahead. Can China maintain its lead - or will it stall?

Investment strategies

REITs: a haven in a Trumpian world?

Equity markets have been lashed by Trump's tariff policies, yet REITs have outperformed. Not only are they largely unaffected by tariffs, but they offer a unique combination of growth, sound fundamentals, and value.

Shares

Why Europe is back on the global investor map

European equities are surging ahead of the U.S this year, driven by strong earnings, undervaluation, and fiscal stimulus. With quality founder-led firms and a strengthening Euro, Europe may be the next global investment hotspot.

Chalmers' disingenuous budget claims

The Treasurer often touts a $207 billion improvement in Australia's financial position. A deeper look at the numbers reveals something less impressive, caused far more by commodity price surprises than policy.

Fixed interest

Duration: Friend or foe in a defensive allocation?

Duration is back. After years in the doghouse, shifting markets and higher yields are restoring its role as a reliable diversifier and income source - offering defensive strength in today’s uncertain environment.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.