What Morpho Means: Why Hackers Target Intellectual Property And Business-Confidential Information

Corporate cyberespionage made the front page last week with the news of Morpho, also known as Wild Neutron. Regardless of what you call it, this revelation was the latest reminder of the growing prominence of corporate espionage on the cyber landscape. The group targets major IT, pharmaceutical, legal, and commodity companies spanning the globe, with concentrated efforts in the United States, Europe, and Canada. It is highly organized and homes in on victims to gather confidential information for future monetization.

Here’s the quick and dirty on how Morpho operates: The group’s modus operandi is a combination of watering-hole attacks, zero-day exploits, and multi-platform malware. It compromises websites pertinent to the target, exploits them, and delivers either a Java-based zero-day exploit or a potential Internet Explorer zero-day exploit. Bottom line: This is cyberespionage via zero-day.

What we can draw from this is that the group either has the technical know-how to discover zero-days -- which is unlikely for a small group, as Morpho is suspected to be - or it has the resources to purchase zero-day exploits on the black market. Such a reliance on what we refer to as the Cybercrime-as-a-Service marketplace would reinforce our assertion that if you are well-resourced, the “services” are available to get into the cybercrime game.

Morpho used custom remote access tools (RATs) to sniff for targeted information or other computers to infect. This group also installed back doors, allowing infected machines to communicate with command-and-control servers over encrypted connections. The smartest thing this group did, however, was clean up after itself -- once emails and confidential information was stolen, Morpho securely deleted files and event logs. It was as if it had never broken in.

It’s because of this careful cleanup and precise execution of zero-days that Morpho has successfully operated since 2011. But Morpho’s success can be attributed to one thing above all: its single-minded and professional approach to compromising, extracting, and leveraging business-confidential information and intellectual property.

Both are valuable to hackers and can spell trouble for any business if they are lost to competitors.

Breaking It Down

Intellectual property, any work or invention originating from a creative source --from art, books, designs, images, logos, and company names to source code, product designs, and pharmaceutical formulas to building blue prints -- is as much an asset as financial resources, property, or physical product. Massive resources are allocated to developing complex products and unique concepts, the loss of which constitutes billions of dollars to companies working to develop ideas that boldly impact the future.

Large industries such as pharmaceutical, chemical, and technology -- the very industries targeted by Morpho -- are popular targets because their IP is easily reproduced or monetized. But smaller, disruptive companies developing new ideas, technologies, and products to challenge existing businesses and entire industries are by no means immune to such cyberattacks.

At what cost? That’s difficult to quantify for obvious reasons. If a factory burns down, a public company is obligated to reflect that loss in its financial statements. Cyberespionage crimes are as difficult to quantify in cost as they often are to detect. But the U.S. Department of Commerce has estimated IP theft of all kinds (not just cybercrime) as a $200 to $250 billion annual hit to U.S. companies. The Organization for Economic Development (OECD) estimates that counterfeiting and piracy cost companies as much as $638 billion a year. Such numbers have prompted McAfee Labs to conclude that cyberespionage breaches are the “crimes of the century” because they impact both society’s present and future economics and progress.

Business-confidential information could include investment data, resource exploration data, and sensitive commercial data such as trade secrets, processes, and contracts, and operational information. This information is almost always valuable and actionable, making it an attractive target.

Not too long ago, business-confidential information was at the center of sports-related cyberespionage involving two professional baseball teams: the St. Louis Cardinals and the Houston Astros. As we saw there and are seeing again with Morpho, information pertinent to business plans, contracts, and transactions is as valuable a commodity (if not more so) than intellectual property. By gaining access to confidential information, Morpho and similar cybercrime groups gain insight into an organization, discovering information that can be leveraged to preempt critical business transactions, product announcements, and investment news.

The Morpho group has succeeded because it has laser-like precision in what it’s looking for and how to go about getting it. Regardless of intention, tactics used, or business model, the main point is that one key common denominator is driving this sort of cybercrime: the value of information that drives business.

And as the world’s economies grow increasingly dependent on information as critical capital, cyberespionage is simply part of the global competitive landscape upon which businesses are competing today. The Morpho and Wild Neutron revelation suggests that any other assessment by executive suites -- anything less than the business-critical need to protect intellectual property and business-confidential information -- is dangerously naïve.

For more information on the cost of cybercrimes such as espionage, please see Intel Security’s report with the Center for Strategic and International Studies (CSIS) on the economic impacts of cybercrime and cyberespionage.