There is huge confusion these days as to the differences between Adware and Spyware. When you set to add other forms of "wares" to the equation things can get even more difficult. For instance, the term Malware just makes thing that much more perplexing. At the end of the day, the result is a lot of confusion and a little fear in regards to seeing anyone of those words.
Example number one:
Imagine you download software off of the internet. A lot of the times you can get software that is totally free. The only catch is that it is going to display advertisements whenever you use the software. This is how the software's developer is going to make their cash so they can afford to just give things away. Now whenever you launch the program you see little poster ads within the application, but otherwise the ads don't show up in any bothersome way.
Example number two:
In this instance you'll download software from the internet. The software is free as in the previous example. For all intents and purposes things will appear identical. You are even notified quite clearly that the ads will appear. The problem is that ads are seen in ways you never actually expected. They pop up even when you aren't utilizing the software you downloaded and the ads become invasive and bothersome.
Example number three:
Here is where you don't necessarily mean to download any software at all. Or, you download something but aren't notified in any way that you will be getting advertisements on your monitor in any form. Still, ads start appearing whenever you use your PC. Sometimes you close them and they just come back. You try to avoid them by uninstalling them but you can't make out any way to do it.
All of those examples deal with adware. It's software that is designed expressly to show ads on your screen. Inherently there is nothing actually wrong with this and as seen in the first example it's always something that you agree to. Sadly, as with the second example, it's often something that delivers more than was agreed.
The latter two examples involve what is known as malware. Adware is not always malware and vice versa, but the two are often bundled together. Malware is essentially software that operates on your computer in a dreadful manner. In some cases, as with the second example, it is just a nuisance, but in other situations it can actually bring about a lot of damage.
As for spyware, well, that can actually exist in any one of the above mentioned examples. Spyware is any type of software that tracks things that you do on your system. For the most part it is malicious. That said, in some cases the kind of software seen in the first example will explicitly express that it uses spyware, though it will say so with softer words.
In its less harmful manifestation, spyware simply watches what you do in terms of websites you visit. It then uses that particulars to send you the most appropriate ads. In its more damaging incarnations spyware can track more personal information than that, and can even send crooks information about your passwords etc.
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