We may not make a lot of things in the USA anymore, but we still lead the world in botnets by a large margin according to volume 9 of Microsoft’s Security Intelligence Report, covering January through June of this year.

The main focus of the report is on botnets and Microsoft sees them as the core platform of malware, the engine that makes the Internet criminal enterprise run. And botmasters are getting more sophisticated: While we have historically thought of different kinds of malware (worms, trojans, spyware) separately, they are bring used together in bots. You might see password stealers used in addition to an IRCbot, for example.

But the bigger news is that this reports confirms some already established trends of decline in several negative factors: Software vulnerabilities, industry-wide, continue to decline in numbers, but remain at high levels. Microsoft doesn’t speculate about it, but I think the high numbers are due at least as much to large amounts of talent and money going into white hat research.

This being Microsoft, they have data on how much we’re updating Windows and their other software, and the news there is good too. Consistent monthly use of Windows Update and other automated Microsoft update mechanisms (e.g. WSUS or Windows Software Update Services) is up substantially. These users should be far better protected against attack.

It’s likely that this phenomenon is due to increased adoption of Windows 7 and, to a lesser extent, Vista, both of which make Windows Update and automatic application of updates the default behavior rather than a strong suggestion, as in XP SP3. The increased use of Windows Update also means more widespread runs of the Microsoft Malicious Software Removal Tool, which runs each time you run Windows Update. This month Microsoft added the Zeus trojan to the list of threats cleaned by the MSRT, which should deal a serious blow to a major botnet already in decline. The percentage of Vista systems needing an MSRT cleaning was 1/5 that of XP SP3 systems, and the percentage of Windows 7 systems 1/2 of Vista’s.

Another major theme of the report is that malware is a world-wide phenomenon and problem and that any serious improvement in the situation will have to have an international basis. You can’t just solve it in the US. Microsoft also repeats here their discussion of progress in collective defense and a “public health” model for Internet security.

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