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In general, Spyware is any technology that aids in gathering information about a person or organization without their knowledge. On the Internet?, Spyware is a program that is put in someone's computer to secretly gather information about the user and relay it to advertisers or other interested parties. Spyware can get in a computer as a the payload of a Virus, as the result of installing a new program, or just simply by viewing the worng page, or lastly clicking on any button provided by some pop-up advertising window.
Data collection programs that are installed with the user's knowledge are not, properly speaking, Spyware, if the user fully understands what data is being collected and with whom it is being shared.

or

Software that gathers information about a user as he or she navigates around the Web, it is intended to track surfing habits in order to build marketing profiles. Spyware is often included in "free downloads" from the Web, where the license agreement (which so many of us accept without reading) may mention that information about your habits will be transmitted back to the company's Web site-but not information specifically about you. Spyware is cause for public concern about privacy on the Internet.

This type of software generally only affects Windows systems; if you're running Linux or FreeBSD you'll never be bothered by large purple monkeys? or yellow links.

Examples:

  • BonziBuddy?
  • Gator (claims to provide: useful utils for remembering web form details, calendar/date applet, etc. Really provides: advertising popups.
  • Comet-cursor
  • HotBar? (claims to provide: IE toolbar. Really provides: ads. Use instead: Google toolbar.)

  • New.net (claims to provide: new TLDs like .cool, .cars, .boats etc. Really provides: you guessed it, ads. Use instead: common sense! A reputable company will get a name on the real Internet.)
  • Incredimail. It makes gratuitive use of html email to put animated gifs and embedded sound into emails, but it rarely looks the same at the recipient's end, and the EULA claims to give them the right to anything you write using it, sending messages back to them (via SMTP).

There is also a category of "real" software that "phones home" in ways that perhaps it shouldn't. RealPlayer and WindowsMediaPlayer are two great examples of this. You can turn it off if you dig through the config enough. If you use the "pagerank" feature of Google's toolbar, it will report every URL you visit back to Google. Officially it's required behaviour for Google to tell you what the pagerank is; unofficially that's a vast amount of information and it's not clear what else Google uses it for. Most people trust them, because they have a history of not being evil.

BonziBuddy? and most other software of this type can be removed by Ad-aware. In some cases the Spyware will try to remove Ad-aware first, and/or prevent lavasoft's download site from resolving so you might have to download it via an uninfected computer. (If this was the case it wouldn't be spyware but a virus)

A number of other Spyware-removers are available, however most of these are also Spyware themselves. For best results you are advised to use the following two Spyware-removers Ad-aware, and SpyBot - search&destroy. The reason for using these two are that they are both updateable over the Internet, and that one finds programs the other doesn't and vice versa.

Even on a clean install of Windows many spyware removal tools will detect a spyware program called Alexia, which is a web cookie that Microsoft puts in the default install, and checks/updates every time you use windowsupdate. It can be safely destroyed.

Spyware will make your Windows installation unstable or destroy it all together. Fun.