Open Backdoors, Broken Windows, and Tainted Chips: A Brief History of the Ongoing Microsoft-China War

When I visited China in 2000, you could buy the newest pirated version of Windows almost anywhere. In fact, you’d be considered stupid if you bought the licensed version. After all, how many Chinese were rich enough, at that time, to afford it? Would you pay a couple of month’s salary for a computer program? Well, neither did the Chinese. That may have been bad enough for Microsoft, but the Chinese had the audacity to take it a step further. Computer manufacturers began installing pirated versions of Windows XP on their new computers. In fact, by 2003, it was estimated that 92% of new computers had pre-installed pirated Windows operating systems. It may seem strange, but in 2011, Windows proudly announced that they had decreased the amount of pre-installed pirated versions of its software to…77%.

Despite that seemingly anemic improvement, Microsoft had other problems. According to a 2005 Wikileaked confidential document, Microsoft found that Chinese firms had the audacity to be exporting the pirated versions of Windows XP, primarily to Nigeria, through an elaborate distribution network. In a study of the local market, they found that 95% of the Microsoft products sold were pirated and that the official Microsoft Nigeria branch was losing 10 to 20 million dollars a year because of this. With copies of Windows XP selling at $2, it’s no wonder that sales were brisk.

However, to some extent, Microsoft was responsible for its own demise. In a secret US Secretary of State document, it was revealed that Microsoft signed an agreement with the Chinese top security provider, TOPSEC. The document pointed out that “TOPSEC provides services and training for the PLA (People’s Liberation Army) and has recruited hackers in the past”. So you would think the last thing Microsoft would want to do was to give this company its source code. Yet, that’s precisely what it did. The document goes on to point out that, “in 2003, the CNITSEC (China Information Technology Security Center) , which is connected to TOPSEC,  signed a Government Security Program (GSP) international agreement with Microsoft that allowed select companies such as TOPSEC access to Microsoft source code in order to secure the Windows platform.” When, in 2006, China complained that Microsoft had installed a backdoor in its Vista operating system, you’d have to admit that, if anyone knew this to be true, China probably did. At the same time, China more or less admitted that they had used similar backdoor technology in their products as well.

Maybe it then comes as no surprise that China used a vulnerability in Microsoft’s Internet Explorer to launch one of the biggest cyber attacks in history, Operation Aurora. This attack’s goal was to capture the source code of major security companies and defense contractors. Companies such as Google, Adobe, Symantec, Yahoo, Morgan Stanley, Northrop Grumman, Dow Chemical, and Juniper Networks, among many others, were hacked between 2009 and 2011.

At the Black Hat Security Conference in 2012, security consultant, Jonathan Brossard, revealed a hardware-based backdoor called, Rakshasa. This is a deadly, nearly undetectable, and unremovable backdoor that can be built into the firmware. Brossard believed that such backdoors were likely to be already in use and many considered China a prime suspect. In such an exploit, the system’s own BIOS could be used  to activate and hide the exploit. So Microsoft decided to scrap BIOS in favor of the more secure UEFI (Unified Extensible Firmware Interface). Windows 8 uses UEFI. The next step was to discontinue support for Windows XP and force an upgrade to Windows 8.

Unfortunately for China, over 50% of government computers run XP. Microsoft says it will extend its support for XP in China and China says it will do its own patching… but it doesn’t want anything to do with Windows 8. And Microsoft isn’t making it easy for China to get it anyway. If you want to buy a copy of Windows 8 in China, you’ll have to download it. Microsoft hopes this will stop piracy. That’s understandable. But China wants to keep a system that they have developed full control over, which is also understandable. It looked like a standoff until China fired the next shot, banning Windows 8 from all government computers. At first, they claimed this was because they wanted to choose only energy efficient programs (pause here for laughter) but later cited security concerns, claiming that Windows 8 could be used to gather sensitive information, implying that some sort of backdoor may be installed in the system. Something about pots and kettles comes to mind.

Now, there are times that US companies will give customers access to their source code so that these customers can check for backdoors. It’s a good way to insure sales. China, it seems, may allow Windows 8, but only if Microsoft gives them the source code for it. So far, Microsoft has refused. Hmm, I wonder why?

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