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Adware are software applications that are designed to allow a number of pop up advertisements straight to the personal computers of potential customers and clients. spyware software applications are programs that are embedded to certain websites in order to track the purchasing habits of existing customers.
http://www.differencebetween.net/technology/difference-between-adware-and-spyware/
Adware allows you to use the program for free by watching ads while using the product. Ads are the price you pay for using the software.
Spyware allows you to use the program for free by collecting your Internet use habits and reprting this data to a company that collects and analyzes it for marketing purposes. Spying is the price you pay for using the software.
As you can see from my description, the concept is almost identical. The reason people get all upset is because they readily acknowledge the ads in adware, but deny any knowledge of the spying in spyware. This is easily remedied if everyone read their End User License Agreement (EULA) of all the software they download and install. Most (but admittedly - not all) spyware makes it very clear in their EULA that they are going to report Internet use as the price for using the product.
Unfortunately, some software abuse this concept by not disclosing the actual spying or worse, Leaving the spyware on your system even after you uninstall the original program.
But to label spyware as an evil and malicious thing is simply not stating fact. If you don't agree with spyware, there is a simple fix. Don't install software known to contain spyware. The Internet has dozens of sites dedicated to listing products known to contain spyware.
"In many cases, adware is a legitimate revenue source for companies who offer their software free to users. A perfect example of this would be the popular e-mail program, Eudora. You can choose to purchase Eudora or run the software in sponsored mode. In sponsored mode Eudora will display an ad window in the program and up to three sponsored toolbar links. Eudora adware is not malicious; it reportedly doesn't track your habits or provide information about you to a third party. This type of adware is simply serving up random paid ads within the program. When you quit the program the ads will stop running on your system.
Unfortunately, some freeware applications which contain adware do track your surfing habits in order to serve ads related to you. When the adware becomes intrusive like this, then we move it in the spyware category and it then becomes something you should avoid for privacy and security reasons. Due to its invasive nature, spyware has really given adware a bad name as many people do not know the differences between the two, or use the the terms interchangeably.
Spyware is considered a malicious program and is similar to a Trojan Horse in that users unwittingly install the product when they install something else. A common way to become a victim of spyware is to download certain peer-to-peer file swapping products that are available today.
Spyware works like adware but is usually a separate program that is installed unknowingly when you install another freeware type program or application. Once installed, the spyware monitors user activity on the Internet and transmits that information in the background to someone else. Spyware can also gather information about e-mail addresses and even passwords and credit card numbers.
Because spyware exists as independent executable programs, they have the capability to monitor your keystrokes, scan files on the hard drive, snoop other applications, such as chat programs or word processors, install other spyware programs, read cookies, change the default home page on the Web browser, while consistently relaying this information back to the spyware author who will either use it for advertising and marketing purposes or sell the information to another party.
Licensing agreements that accompany software downloads sometimes warn the user that a spyware program will be installed along with the requested software, but the licensing agreements are not always be read completely by users because the notice of a spyware installation is often couched in obtuse, hard-to-read legal disclaimers."
(from http://www.webopedia.com/DidYouKnow/Internet/2004/spyware.asp)
Spy Cookies are from websites that have been known to use web tracking/gathered information to better suit their advertising.
(from http://www.iron-fe-works.com/lockjar.asp)
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