Security Economics of the Internet of Things

Brian Krebs is a popular reporter on the cybersecurity beat. He regularly exposes cybercriminals and their tactics, and consequently is regularly a target of their ire. Last month, he wrote about an online attack-for-hire service that resulted in the arrest of the two proprietors. In the aftermath, his site was taken down by a massive DDoS attack.

In many ways, this is nothing new. Distributed denial-of-service attacks are a family of attacks that cause websites and other Internet-connected systems to crash by overloading them with traffic. The “distributed” part means that other insecure computers on the Internet — sometimes in the millions­ — are recruited to a botnet to unwittingly participate in the attack. The tactics are decades old; DDoS attacks are perpetrated by lone hackers trying to be annoying, criminals trying to extort money, and governments testing their tactics. There are defenses, and there are companies that offer DDoS mitigation services for hire.

Basically, it’s a size vs. size game. If the attackers can cobble together a fire hose of data bigger than the defender’s capability to cope with, they win. If the defenders can increase their capability in the face of attack, they win.

What was new about the Krebs attack was both the massive scale and the particular devices the attackers recruited. Instead of using traditional computers for their botnet, they used CCTV cameras, digital video recorders, home routers, and other embedded computers attached to the Internet as part of the Internet of Things.

Much has been written about how the IoT is wildly insecure. In fact, the software used to attack Krebs was simple and amateurish. What this attack demonstrates is that the economics of the IoT mean that it will remain insecure unless government steps in to fix the problem. This is a market failure that can’t get fixed on its own.

Our computers and smartphones are as secure as they are because there are teams of security engineers working on the problem. Companies like Microsoft, Apple, and Google spend a lot of time testing their code before it’s released, and quickly patch vulnerabilities when they’re discovered. Those companies can support such teams because those companies make a huge amount of money, either directly or indirectly, from their software­ — and, in part, compete on its security. This isn’t true of embedded systems like digital video recorders or home routers. Those systems are sold at a much lower margin, and are often built by offshore third parties. The companies involved simply don’t have the expertise to make them secure.

Even worse, most of these devices don’t have any way to be patched. Even though the source code to the botnet that attacked Krebs has been made public, we can’t update the affected devices. Microsoft delivers security patches to your computer once a month. Apple does it just as regularly, but not on a fixed schedule. But the only way for you to update the firmware in your home router is to throw it away and buy a new one.

The security of our computers and phones also comes from the fact that we replace them regularly. We buy new laptops every few years. We get new phones even more frequently. This isn’t true for all of the embedded IoT systems. They last for years, even decades. We might buy a new DVR every five or ten years. We replace our refrigerator every 25 years. We replace our thermostat approximately never. Already the banking industry is dealing with the security problems of Windows 95 embedded in ATMs. This same problem is going to occur all over the Internet of Things.

The market can’t fix this because neither the buyer nor the seller cares. Think of all the CCTV cameras and DVRs used in the attack against Brian Krebs. The owners of those devices don’t care. Their devices were cheap to buy, they still work, and they don’t even know Brian. The sellers of those devices don’t care: they’re now selling newer and better models, and the original buyers only cared about price and features. There is no market solution because the insecurity is what economists call an externality: it’s an effect of the purchasing decision that affects other people. Think of it kind of like invisible pollution.

What this all means is that the IoT will remain insecure unless government steps in and fixes the problem. When we have market failures, government is the only solution. The government could impose security regulations on IoT manufacturers, forcing them to make their devices secure even though their customers don’t care. They could impose liabilities on manufacturers, allowing people like Brian Krebs to sue them. Any of these would raise the cost of insecurity and give companies incentives to spend money making their devices secure.

Of course, this would only be a domestic solution to an international problem. The Internet is global, and attackers can just as easily build a botnet out of IoT devices from Asia as from the United States. Long term, we need to build an Internet that is resilient against attacks like this. But that’s a long time coming. In the meantime, you can expect more attacks that leverage insecure IoT devices.

This essay previously appeared on Vice Motherboard.

Slashdot thread.

Here are some of the things that are vulnerable.

EDITED TO ADD (10/17: DARPA is looking for IoT-security ideas from the private sector.

Posted on October 10, 2016 at 10:26 AM • 69 Comments