In 2005, it was revealed that the implementation of copy protection measures on about 22 million CDs distributed by Sony BMG installed one of two pieces of software that provided a form of digital rights management (DRM) by modifying the operating system to interfere with CD copying. Neither program could easily be uninstalled, and they created vulnerabilities that were exploited by unrelated malware. One of the programs would install and "phone home" with reports on the user's private listening habits, even if the user refused its end-user license agreement (EULA), while the other was not mentioned in the EULA at all. Both programs contained code from several pieces of copylefted free software in an apparent infringement of copyright, and configured the operating system to hide the software's existence, leading to both programs being classified as rootkits. Sony BMG initially denied that the rootkits were harmful. It then released an official uninstaller for one of the programs that merely made the program's files visible while also installing additional software that could not be easily removed, collected an email address from the user and introduced further security vulnerabilities. Following public outcry, government investigations and class-action lawsuits in 2005 and 2006, Sony BMG partially addressed the scandal with consumer settlements, a recall of about 10% of the affected CDs and the suspension of CD copy-protection efforts in early 2007.
Background In August 2000, statements by Sony Pictures Entertainment U.S. senior vice president Steve Heckler foreshadowed the events of late 2005. Heckler told attendees at the Americas Conference on Information Systems: "The industry will take whatever steps it needs to protect itself and protect its revenue streams ... It will not lose that revenue stream, no matter what ... Sony is going to take aggressive steps to stop this. We will develop technology that transcends the individual user. We will firewall Napster at source – we will block it at your cable company. We will block it at your phone company. We will block it at your ISP. We will firewall it at your PC ... These strategies are being aggressively pursued because there is simply too much at stake." In Europe, BMG created a minor scandal in 2001 when it released Natalie Imbruglia's second album White Lilies Island without warning labels stating that the CD contained copy protection. The CDs were eventually replaced. BMG and Sony both released copy-protected versions of certain releases in certain markets in late 2001, and a late 2002 report indicated that all BMG CDs sold in Europe would contain some form of copy protection.
Copy-protection software The two pieces of copy-protection software at issue in the 2005–2007 scandal were included on over 22 million CDs marketed by Sony BMG, the record company formed by the 2004 merger of Sony and BMG's recorded music divisions. About two million of those CDs, spanning 52 titles, contained First 4 Internet (F4I)'s Extended Copy Protection (XCP), which was installed on Microsoft Windows systems after the user accepted the EULA, which made no mention of the software. The remaining 20 million CDs, spanning 50 titles, contained SunnComm's MediaMax CD-3, which was installed on either Microsoft Windows or macOS systems after the user was presented with the EULA, regardless of whether the user accepted it. However, macOS prompted the user for confirmation when the software attempted to modify the OS, whereas Windows did not.
XCP rootkit
The scandal began on October 31, 2005, when Winternals researcher Mark Russinovich posted to his blog a detailed description and technical analysis of F4I's XCP software that he determined had been recently installed on his computer by a Sony BMG music CD. Russinovich compared the software to a rootkit because of its surreptitious installation and efforts to hide its existence. He noted that the EULA does not mention the software, and he charged that the software is illegitimate and that digital rights management had "gone too far". Anti-virus firm F-Secure concurred: "Although the software isn't directly malicious, the used rootkit hiding techniques are exactly the same used by malicious software to hide. The DRM software will cause many similar false alarms with all AV software that detect rootkits. ... Thus it is very inappropriate for commercial software to use these techniques." After public pressure, Symantec and other anti-virus vendors included detection for the rootkit in their products as well, and Microsoft announced that it would include detection and removal capabilities in its security patches. Russinovich discovered numerous problems with XCP:
It creates security holes that can be exploited by malicious software such as worms or viruses. It constantly runs in the background and excessively consumes system resources, slowing down the user's computer, regardless of whether a protected CD is playing. It employs unsafe procedures to start and stop, which could lead to system crashes. It has no uninstaller, and is installed in such a way that inexpert attempts to uninstall it can cause the operating system to fail to recognize existing drives. Soon after Russinovich's first post, several trojans and worms exploiting XCP's security holes appeared. Some even used the vulnerabilities to cheat in online games. Sony BMG quickly released software to remove the rootkit component of XCP from affected Microsoft Windows computers, but after Russinovich analyzed the utility, he reported in his blog that it only exacerbated the security problems and raised further concerns about privacy. Russinovich noted that the removal program merely unmasked the hidden files installed by the rootkit but did not actually remove the rootkit. He also reported that it installed additional software that could not be uninstalled. In order to download the uninstaller, he found that it was necessary to provide an e-mail address (which the Sony BMG Privacy Policy implied was added to various bulk e-mail lists) and to install an ActiveX control containing backdoor methods (marked as "safe for scripting" and thus prone to exploits). Microsoft later issued a killbit for the ActiveX control. On November 18, 2005, Sony BMG provided a "new and improved" removal tool to remove the rootkit component of XCP from affected Microsoft Windows computers.
Legal and financial problems
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