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dubbed WannaCry that incorporated the bugs pilfered from US intelligence penetrated perhaps 300,000 computers running outdated Microsoft software in an estimated 150 countries.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

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

The rubbery numbers behind super tax concessions

In selling the super tax, Labor has repeated Treasury claims of there being $50 billion in super tax concessions annually, mostly flowing to high-income earners. This figure is vastly overstated.

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

Latest Updates

Taxation

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

7 key charts on the state of the Australian property market

The Australian property market stirs fierce debate - often bullish optimism versus crash predictions. But beyond the noise, seven charts reveal what's really driving prices and the outlook for residential real estate.

A simple alternative to the $3 million super tax

Division 296 aims to introduce improved fairness into the superannuation system, yet is overly complex. This scours the world for better ideas and suggests a simpler alternative which can achieve the same goals.

CBA and the index conundrum for super funds

After the hyperbolic rise in CBA shares, super funds are floating the idea of carving out the weightings of ASX bank securities and indexing them within their portfolios. This looks at why that might be a big error.

Strategy

10 policies to drive Australian productivity higher

Here's a comprehensive list of proposed reforms to fix Australia's stagnating economy, including introducing a flat income tax rate, reducing migration, and making childcare tax-deductible.

Interviews

Where to find big winners in Asia

As more money looks for a home outside the US, Asia may soon get some love. Fidelity's Anthony Srom outlines the best places in Asia to invest, including in Chinese consumer names, Indian financials, and Thailand.

Investment strategies

We have trouble understanding the time value of money

We overvalue the present and underestimate the future - it’s a cognitive glitch called hyperbolic discounting. It affects savings, spending, and loans, and it's more common - and costly - than we think. 

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.