Malware right from the box

WASHINGTON – A customer in Shenzhen, China, took a brand new laptop out of its box and booted it up for the first time. But as the screen lit up, the computer began taking on a life of its own. The machine, triggered by a virus hidden in its hard drive, began searching across the Internet for another computer.

The laptop, supposedly in pristine, super-fast, direct-from-the-factory condition, had instantly become part of an illegal, global network capable of attacking websites, looting bank accounts and stealing personal data.

For years, online investigators have warned consumers about the dangers of opening or downloading files emailed to them from unknown or suspicious sources. Now, they say malicious software and computer code could be lurking on computers before the bubble wrap even comes off.

The shopper in this case was part of a team of Microsoft researchers in China investigating the sale of counterfeit software. They suddenly had been introduced to a malware called Nitol. The incident was revealed in court documents unsealed Thursday in a federal court in Virginia.

The documents are part of a computer fraud lawsuit filed by Microsoft against a Web domain registered to a Chinese businessman named Peng Yong. The company says it is a major hub for illicit Internet activity. The domain is home base for Nitol and more than 500 other types of malware, making it the largest single repository of infected software that Microsoft officials have ever encountered.

Peng, the owner of an Internet services firm, said he was not aware of the Microsoft lawsuit but he denied the allegations and said his company does not tolerate improper conduct on the domain, 3322.org. Three other unidentified individuals accused by Microsoft of establishing and operating the Nitol network are also named in the suit.

What emerges most vividly from the court records and interviews with Microsoft officials is a disturbing picture of how vulnerable Internet users have become, in part because of weaknesses in computer supply chains. To increase their profit margins, less reputable computer manufacturers and retailers may use counterfeit copies of popular software products to build machines more cheaply. Plugging the holes is nearly impossible, especially in less regulated markets like China, and that leaves openings for cybercriminals.

“They’re really changing the ways they try to attack you,” said Richard Boscovich, a former federal prosecutor and a senior attorney in Microsoft’s digital crimes unit.

For Microsoft, pursuing cybercriminals is a smart business. Its Windows operating system runs most of the computers connected to the Internet. Victims of malware are likely to believe their problems stem from Windows instead of a virus they are unaware of, and that damages the company’s brand and reputation.