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As the ransomware industry evolves, experts are predicting hackers will only continue to find more and more ways of using the technology to exploit businesses and individuals.
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Ransomware is now a billion-dollar industry. But it wasn’t always that large — nor was it a prevalent cybersecurity risk like it is today.
Dating back to the 1980s, ransomware is a form of malware used by cybercriminals to lock files on a person’s computer and demand payment to unlock them.
The technology — which officially turned 35 on Dec. 12 — has come a long way, with criminals now able to spin up ransomware much faster and deploy it across multiple targets.
Cybercriminals raked in $1 billion of extorted cryptocurrency payments from ransomware victims in 2023 — a record high, according to data from blockchain analysis firm Chainalysis.
Experts expect ransomware to continue evolving, with modern-day cloud computing tech, artificial intelligence and geopolitics shaping the future.
How did ransomware come about?
The first event considered to be a ransomware attack happened in 1989.
A hacker physically mailed floppy disks claiming to contain software that could help determine whether someone was at risk of developing AIDs.
However, when installed, the software would hide directories and encrypt file names on people’s computers after they’d rebooted 90 times.
It would then display a ransom note requesting a cashier’s check to be sent to an address in Panama for a license to restore the files and directories.
The program became known by the cybersecurity community as the “AIDs Trojan.”
“It was the first ransomware and it came from someone’s imagination. It wasn’t something that they’d read about or that had been researched,” Martin Lee, EMEA lead for Talos, the cyber threat intelligence division of IT equipment giant Cisco, told CNBC in an interview.
“Prior to that, it was just never discussed. There wasn’t even the theoretical concept of ransomware.”
The perpetrator, a Harvard-taught biologist named Joseph Popp, was caught and arrested. However, after displaying erratic behavior, he was found unfit to stand trial and returned to the United States.
How ransomware has developed
Since the AIDs Trojan emerged, ransomware has evolved a great deal. In 2004, a threat actor targeted Russian citizens with a criminal ransomware program known today as “GPCode.”
The program was delivered to people via email — an attack method today commonly known as “phishing.” Users, tempted with the promise of an attractive career offer, would download an attachment which contained malware disguising itself as a job application form.
Once opened, the attachment downloaded and installed malware on the victim’s computer, scanning the file system and encrypting files and demanding payment via wire transfer.
Then, in the early 2010s, ransomware hackers turned to crypto as a method of payment.
In 2013, only a few years after the creation of bitcoin, the CryptoLocker ransomware emerged.
Hackers targeting people with this program demanded payment in either bitcoin or prepaid cash vouchers — but it was an early example of how crypto became the currency of choice for ransomware attackers.
Later, more prominent examples of ransomware attacks that selected crypto as the ransom payment method of choice included the likes of WannaCry and Petya.
“Cryptocurrencies provide many advantages for the bad guys, precisely because it is a way of transferring value and money outside of the regulated banking system in a way that is anonymous and immutable,” Lee told CNBC. “If somebody’s paid you, that payment can’t be rolled back.”
CryptoLocker also became notorious in the cybersecurity community as one of the earliest examples of a “ransomware-as-a-service” operation — that is, a ransomware service sold by developers to more novice hackers for a fee to allow them to carry out attacks.
“In the early 2010s, we have this increase in professionalization,” Lee said, adding that the gang behind CryptoLocker were “very successful in operating the crime.”
What’s next for ransomware?
As the ransomware industry evolves even further, experts are predicting hackers will only continue to find more and more ways of using the technology to exploit businesses and individuals.
By 2031, ransomware is predicted to cost victims a combined $265 billion annually, according to a report from Cybersecurity Ventures.
Some experts worry AI has lowered the barrier to entry for criminals looking to create and use ransomware. Generative AI tools like OpenAI’s ChatGPT allow everyday internet users to insert text-based queries and requests and get sophisticated, humanlike answers in response — and many programmers are even using it to help them write code.
Mike Beck, chief information security officer of Darktrace, told CNBC’s “Squawk Box Europe” there’s a “huge opportunity” for AI — both in arming the cybercriminals and improving productivity and operations within cybersecurity companies.
“We have to arm ourselves with the same tools that the bad guys are using,” Beck said. “The bad guys are going to be using the same tooling that is being used alongside all that kind of change today.”
But Lee doesn’t think AI poses as severe a ransomware risk as many would think.
“There’s a lot of hypothesis about AI being very good for social engineering,” Lee told CNBC. “However, when you look at the attacks that are out there and clearly working, it tends to be the simplest ones that are so successful.”
Targeting cloud systems
A serious threat to watch out for in future could be hackers targeting cloud systems, which enable businesses to store data and host websites and apps remotely from far-flung data centers.
“We haven’t seen an awful lot of ransomware hitting cloud systems, and I think that’s likely to be the future as it progresses,” Lee said.
We could eventually see ransomware attacks that encrypt cloud assets or withhold access to them by changing credentials or using identity-based attacks to deny users access, according to Lee.
Geopolitics is also expected to play a key role in the way ransomware evolves in the years to come.
“Over the last 10 years, the distinction between criminal ransomware and nation-state attacks is becoming increasingly blurred, and ransomware is becoming a geopolitical weapon that can be used as a tool of geopolitics to disrupt organizations in countries perceived as hostile,” Lee said.
“I think we’re probably going to see more of that,” he added. “It’s fascinating to see how the criminal world could be co-opted by a nation state to do its bidding.”
Another risk Lee sees gaining traction is autonomously distributed ransomware.
“There is still scope for there to be more ransomwares out there that spread autonomously — perhaps not hitting everything in their path but limiting themselves to a specific domain or a specific organization,” he told CNBC.
Lee also expects ransomware-as-a-service to expand rapidly.
“I think we will increasingly see the ransomware ecosystem becoming increasingly professionalized, moving almost exclusively towards that ransomware-as-a-service model,” he said.
But even as the ways criminals use ransomware are set to evolve, the actual makeup of the technology isn’t expected to change too drastically in the coming years.
“Outside of RaaS providers and those leveraging stolen or procured toolchains, credentials and system access have proven to be effective,” Jake King, security lead at internet search firm Elastic, told CNBC.
“Until further roadblocks appear for adversaries, we will likely continue to observe the same patterns.”
Alphabet CEO Sundar Pichai gestures during a session at the World Economic Forum (WEF) annual meeting in Davos, on January 22, 2020.
Fabrice COFFRINI | AFP | Getty Images
Google CEO Sundar Pichai told employees last week that “the stakes are high” for 2025, as the company faces increased competition and regulatory hurdles and contends with rapid advancements in artificial intelligence.
At a 2025 strategy meeting on Dec. 18, Pichai and other Google leaders, donning ugly holiday sweaters, hyped up the coming year, most notably as it pertains to what’s coming in AI, according to audio obtained by CNBC.
“I think 2025 will be critical,” Pichai said. “I think it’s really important we internalize the urgency of this moment, and need to move faster as a company. The stakes are high. These are disruptive moments. In 2025, we need to be relentlessly focused on unlocking the benefits of this technology and solve real user problems.”
Some employees attended the meeting in person at Google’s headquarters in Mountain View, California, and others tuned in virtually.
Pichai’s comments come after a year packed with some of the most intense pressure Google has experienced since going public two decades ago. While areas like search ads and cloud produced strong revenue growth, competition picked up in Google’s core markets, and the company faced internal challenges including culture clashes and concerns about Pichai’s vision for the future.
Additionally, regulation is now heavier than ever.
In August, a federal judge ruled that Google illegally holds a monopoly in the search market. The Justice Department in November asked that Google be forced to divest its Chrome internet browser unit. In a separate case, the DOJ accused the company of illegally dominating online ad technology. That trial closed in September and awaits a judge ruling.
That same month, Britain’s competition watchdog issued a statement of objections over Google’s ad tech practices, which the regulator provisionally found are impacting competition in the U.K.
“It’s not lost on me that we are facing scrutiny across the world,” Pichai said. “It comes with our size and success. It’s part of a broader trend where tech is now impacting society at scale. So more than ever, through this moment, we have to make sure we don’t get distracted.”
A Google spokesperson declined to comment.
Google’s search business still has dominant market share, but generative AI has served up all sorts of new ways for people to access online information, and has brought with it a host of new competitors.
OpenAI’s ChatGPT kicked off the hype cycle in late 2022, and investors including Microsoft have since propelled the company to a $157 billion valuation. In July, OpenAI announced it would launch a search engine of its own. Perplexity is also promoting its AI-powered search service and recently closed a $500 million funding round at a $9 billion valuation.
Google is investing heavily to try and stay on top, principally through Gemini, its AI model. The Gemini app gives users access to a number of tools, including Google’s chatbot.
Pichai said “building big, new business” is a top priority. That includes the Gemini app, which executives said they see as Google’s next app to reach half a billion users. The company currently has 15 apps that have hit that mark.
“With the Gemini app, there is strong momentum, particularly over the last few months,” Pichai said. “But we have some work to do in 2025 to close the gap and establish a leadership position there as well.”
“Scaling Gemini on the consumer side will be our biggest focus next year,” Pichai later added.
‘Don’t always have to be first’
At the meeting, Pichai showed a chart of large language models, with Gemini 1.5 leading OpenAI’s GPT and other competitors.
“I expect some back and forth” in 2025, Pichai said. “I think we’ll be state of the art.”
He acknowledged that Google has had to play catchup.
“In history, you don’t always need to be first but you have to execute well and really be the best in class as a product,” he said. “I think that’s what 2025 is all about.”
Executives took questions that were submitted by employees through Google’s internal system. One comment read aloud by Pichai suggested that ChatGPT “is becoming synonymous to AI the same way Google is to search,” with the questioner asking, “What’s our plan to combat this in the upcoming year? Or are we not focusing as much on consumer facing LLM?”
For the answer, Pichai turned to DeepMind co-founder Demis Hassabis, who said that teams are going to “turbo charge” the Gemini app and that the company has seen progress in the number of users since launching the app in February. He said “the products themselves are going to evolve massively over the next year or two.”
Hassabis described a vision for a universal assistant that “can seamlessly operate over any domain, any modality or any device.”
Project Astra, Google’s experimental version of a universal assistant that the company announced in May, will be updated in the first half of the year.
Another employee question asked whether Google will be able to get AI products to scale without charging $200 a month “like other companies.”
“Right now, we don’t have any plans for this kind of subscription level,” Hassabis responded, adding that he thinks the $20 monthly charge for Gemini advanced is a good value. “I wouldn’t necessarily say never but there are no plans for that at the moment.”
Toward the end of the meeting, Google welcomed to the stage Josh Woodward, the head of Google Labs. He took the microphone as the Zombie Nation song “Kernkraft 400” played loudly in the background.
“I’m going to try to do six demos in eight minutes,” said Woodward, who’s known for his high level of energy.
Woodward started by showing off Jules, a coding assistant that’s in a trusted tester’s program. He said, “It’s where the future of software development is headed.”
Woodward then shifted to AI notetaking product NotebookLM, which featured a series of updates in 2024, including a podcasting tool. Woodward demonstrated how the company is trying a new feature that allows the user to “call in” to a podcast.
He then moved onto Project Mariner, an AI-powered multi-tasking Chrome extension. Woodward asked it to add the top restaurants from Tripadvisor to the Maps app. After a brief pause, the demo successfully worked, leading employees in attendance to erupt in applause.
Throughout the meeting, Pichai kept reminding employees of the need to “stay scrappy.” Google has gone through an extensive phase of cost cutting that included eliminating about 6% of its workforce in 2023 and a continued focus on efficiency.
As of the end of the third quarter, Alphabet had 181,269 employees, down about 5% from the end of 2022.
At one point, Pichai referenced Google founders Larry Page and Sergey Brin, who started the company 26 years ago, long before cloud computing or AI tools existed.
“In early Google days, you look at how the founders built our data centers, they were really really scrappy in every decision they made,” Pichai said. “Often, constraints lead to creativity. Not all problems are always solved by headcount.”
OpenAI said Friday that in moving toward a new for-profit structure in 2025, the company will create a public benefit corporation to oversee commercial operations, removing some of its nonprofit restrictions and allowing it to function more like a high-growth startup.
“The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” OpenAI’s board wrote in the post. “We once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness.”
The pressure on OpenAI is tied to its $157 billion valuation, achieved in the two years since the company launched its viral chatbot, ChatGPT, and kicked off the boom in generative artificial intelligence. OpenAI closed its latest $6.6 billion round in October, gearing up to aggressively compete with Elon Musk’s xAI as well as Microsoft, Google, Amazon and Anthropic in a market that’s predicted to top $1 trillion in revenue within a decade.
Developing the large language models at the heart of ChatGPT and other generative AI products requires an ongoing investment in high-powered processors, provided largely by Nvidia, and cloud infrastructure, which OpenAI largely receives from top backer Microsoft.
OpenAI expects about $5 billion in losses on $3.7 billion in revenue this year, CNBC confirmed in September. Those numbers are increasing rapidly.
By transforming into a Delaware PBC “with ordinary shares of stock,” OpenAI says it can pursue commercial operations, while separately hiring a staff for its nonprofit arm and allowing that wing to take on charitable activities in health care, education and science.
The nonprofit will have a “significant interest” in the PBC “at a fair valuation determined by independent financial advisors,” OpenAI wrote.
OpenAI’s complicated structure as it exists today is the result of its creation as a nonprofit in 2015. It was founded by CEO Sam Altman, Musk and others as a research lab focused on artificial general intelligence, or AGI, which was an entirely futuristic concept at the time.
In 2019, OpenAI aimed to move past its role as solely a research lab in hopes of functioning more like a startup, so it created a so-called capped-profit model, with the nonprofit still controlling the overall entity.
“Our current structure does not allow the Board to directly consider the interests of those who would finance the mission and does not enable the nonprofit to easily do more than control the for-profit,” OpenAI wrote in Friday’s post.
OpenAI added that the change would “enable us to raise the necessary capital with conventional terms like our competitors.”
Musk’s opposition
OpenAI’s efforts to restructure face some major hurdles. The most significant is Musk, who is in the midst of a heated legal battle with Altman that could have a significant impact on the company’s future.
In recent months, Musk has sued OpenAI and asked a court to stop the company from converting to a for-profit corporation from a nonprofit. In posts on X, he described that effort as a “total scam” and claimed that “OpenAI is evil.” Earlier this month, OpenAI clapped back, alleging that in 2017 Musk “not only wanted, but actually created, a for-profit” to serve as the company’s proposed new structure.
In addition to its face-off with Musk, OpenAI has been dealing with an outflow of high-level talent, due in part to concerns that the company has focused on taking commercial products to market at the expense of safety.
In late September, OpenAI Chief Technology Officer Mira Murati announced she would depart the company after 6½ years. That same day, research chief Bob McGrew and Barret Zoph, a research vice president, also announced they were leaving. A month earlier, co-founder John Schulman said he was leaving for rival startup Anthropic.
Altman said during a September interview at Italian Tech Week that recent executive departures were not related to the company’s potential restructuring: “We have been thinking about that — our board has — for almost a year independently, as we think about what it takes to get to our next stage,” he said.
Those weren’t the first big-name exits. In May, OpenAI co-founder Ilya Sutskever and former safety leader Jan Leike announced their departures, with Leike also joining Anthropic.
Leike wrote in a social media post at the time that disagreements with leadership about company priorities drove his decision.
“Over the past years, safety culture and processes have taken a backseat to shiny products,” he wrote.
One employee, who worked under Leike, quit soon after him, writing on X in September that “OpenAI was structured as a non-profit, but it acted like a for-profit.” The employee added, “You should not believe OpenAI when it promises to do the right thing later.”
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