Web attacks could cost $US1b

The Yankee Group arrived at the $1.2 billion figure by estimating revenue losses at the affected Web sites, losses in market capitalisation, and the amount that will be spent upgrading security infrastructures as a result of the attacks, according to the research firm.

What's more, the situation could get worse in the foreseeable future, according to Matthew Kovar, the senior Yankee Group analyst who compiled the estimate.

The attacks this week were initiated by hackers who penetrated insecure servers hosted by large organisations like universities and research institutions, according to Kovar. While few servers are of that type, similar attacks could be launched in the future from PCs equipped with high-speed Internet connections, the analyst says.

"The always-on cable and DSL [digital subscriber line] Internet companies must examine their networks, which traditionally do not provide for home user PC-level security, to see whether their networks can be used as the next launching points of such future attacks," Kovar says in his report. He adds that such companies should be held liable for attacks that are initiated through their networks.

The Yankee Group recommended a series of steps to protect against the attacks. The firm recommends installing an extensive array of security software and apparatus.

As of Thursday afternoon, the source of the online assaults, which began early Monday, still hadn't been traced. The Federal Bureau of Investigation is on the case, and the US Department of Commerce has asked companies and universities to search their computer systems for malicious code that could be used unwittingly to help launch the attacks.

The assaults are all of a type known as "distributed denial of service" attacks, in which a Web site is bombarded with thousands of requests for information in a very short period of time, causing it to grind to a halt.

Other sites affected so far include news provider CNN, technology news site ZDNet, Buy.com, and E-Trade. The sites experienced slowdowns in service that ranged from two hours and 45 minutes to five hours, The Yankee Group says.

Market capitalisation losses on the days of the attacks exceeded $1 billion, according to Yankee. Revenue lost in sales and advertising by the affected sites is expected to exceed $100 million, and Internet companies will spend an additional $100 million to $200 million on security upgrades in fiscal 2000, the research firm predicted.

Damage to the affected companies' brands, partnerships, and customer relations could push the tally higher, The Yankee Group says.

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