Google has reportedly stopped censoring Chinese search results for its Google.cn property, in response to what it said earlier this week were targeted attacks against its corporate infrastructure aimed at Chinese dissident groups. But a security research firm claims the attack that hit Google was part of a larger, unusually sophisticated assault aimed at stealing source code from Google and at least 30 other Silicon Valley firms, banks and defense contractors.

Also, Google switches to “always on” encryption for all Gmail users. And some pundits see ulterior motives in Google’s Chinese hacking disclosure. More after the jump.

In a report released shortly after Google’s disclosure Tuesday evening, Sterling, Va. based iDefense cited two independent, anonymous sources in the defense contracting and intelligence consulting community as saying that Google traced the attack back to a “drop server” used as a repository for stolen files, where Google discovered its own data as well as proprietary data suggesting that at least 33 additional companies had been hit.

iDefense said the attack bears “significant resemblance” to a July 2009 attack in which assailants launched targeted e-mail campaigns against approximately 100 IT-focused companies. That attack employed a PDF file that exploited a then-undocumented vulnerability in Adobe Reader, and that a similar leveraging booby-trapped PDFs-as-attachments was used in the attack against Google, the report notes.

Kim Zetter at Wired.com’s Threat Level blog has a great deal more information in her thorough story on this.

Cynics see all kinds of ulterior motives in Google’s announcement that it got hacked and the subsequent arm-twisting with the Chinese government. Foreign Policy‘s Evgeny Morozov has penned a pair of incisive and trenchant opinion pieces speculating that Google’s move was little more than a calculated PR and business bid to gain market share vis-a-vis China’s dominant Baidu search engine. Krebsonsecurity.com reader and fellow security blogger Gunnar Peterson pointed my attention to a piece by Motley Fool‘s Tim Hanson that echoes those sentiments.

In apparently related news, Google has switched to “always on” encryption for all Gmail users, not just for those who have gone out of their way to select the “always use https://” option. By default, Google has always forced users to transmit their credentials over an encrypted (https://) connection when logging in, but after that Gmail users were popped back into an unencrypted connection unless they had changed the default option in the Gmail user settings to encrypt all Gmail communications.

The danger is that there are now free tools that help attackers steal the session cookie that most Webmail providers use to indicate users have already authenticated.  Armed with these tools, anyone recording the traffic on the local network would be able to access your Gmail inbox by simply loading that cookie on their machine. While these tools assume the attacker is on the same network as the target, most users do not sign out of Web mail services, and any session cookies that keep users logged in to their Webmail will most likely be transmitted periodically when roving users connect to a wireless network, for example.

Alas, Google has many properties that still do not enjoy this always-encrypted setting. In mid-2009, a Who’s Who of more than three dozen high-tech and security experts from industry and academia urged Google to encrypt all Google services by default, noting that tens of millions of consumers now rely on Google for a wide array of services that include sensitive data, such as Google Adsense, Adwords, Google Health. Still, this is a welcome step that hopefully will be emulated by the likes of Microsoft and Yahoo!, the other two major Webmail providers.

In a huge disclosure today, Google said a sophisticated and targeted cyber attack against its corporate infrastructure late last year was aimed at accessing the Gmail accounts of Chinese human rights activists. As a result of the incident, the company says it will no longer censor search results on behalf of the Chinese government, and that it may in fact cease operations in the country altogether.

In a posting to its Official Google Blog, the company said that in mid-December a “highly sophisticated and targeted attack” against its internal systems “resulted in the theft of intellectual property from Google.” The search engine giant said that the attack also struck at least 20 other large companies from a wide range of businesses, and that it is currently in the process of notifying those companies.

Google said it has evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists.

“Based on our investigation to date we believe their attack did not achieve that objective. Only two Gmail accounts appear to have been accessed, and that activity was limited to account information (such as the date the account was created) and subject line, rather than the content of emails themselves,” the company said. “We have discovered that the accounts of dozens of U.S.-, China- and Europe-based Gmail users who are advocates of human rights in China appear to have been routinely accessed by third parties. These accounts have not been accessed through any security breach at Google, but most likely via phishing scams or malware placed on the users’ computers.”

As a result of the attacks, Google says it is no longer willing to continue censoring Google.cn search results. From the Google announcement:

“We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. At the time we made clear that ‘we will carefully monitor conditions in China, including new laws and other restrictions on our services. If we determine that we are unable to achieve the objectives outlined we will not hesitate to reconsider our approach to China.’

These attacks and the surveillance “they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences. We want to make clear that this move was driven by our executives in the United States, without the knowledge or involvement of our employees in China who have worked incredibly hard to make Google.cn the success it is today. We are committed to working responsibly to resolve the very difficult issues raised.”

Google didn’t say exactly how the attackers managed to break into its corporate infrastructure, but it did warn users to be cautious when clicking on links appearing in instant messages and emails, or when asked to share personal information like passwords online. The company also references the targeted attacks that led to the creation of Ghostnet, a massive spying ring targeting Chinese dissident groups that relied heavily on targeted e-mail attacks.

The disclosure also comes on the day that Adobe Systems issued a long-awaited update to fix a critical security flaw in its Adobe Reader and Adobe Acrobat software that hackers have been using in just these sorts of targeted attacks since the vulnerability was first detailed roughly one month ago.

There is evidence to suggest that this same vulnerability may have been used in the attack disclosed by Google, or that Adobe itself was among the other companies targeted. In a blog post of its own today, Adobe’s Pooja Prasad writes that “Adobe became aware on January 2, 2010 of a computer security incident involving a sophisticated, coordinated attack against corporate network systems managed by Adobe and other companies. We are currently in contact with other companies and are investigating the incident. At this time, we have no evidence to indicate that any sensitive information–including customer, financial, employee or any other sensitive data–has been compromised. We anticipate the full investigation will take quite some time to complete. We have and will continue to use information gained from this attack to make infrastructure improvements to enhance security for Adobe, our customers and our partners.”

UPDATE, 7:22 p.m. ET: I just spoke with Wiebke Lips, Adobe’s senior manager for corporate communications. She said the incident referenced in the Adobe blog post was unrelated to the Google attack. “It was just a bad coincidence that these came out on the same day. We’re still investigating this whole issue, as is Google. We had this quarterly update scheduled for the last three months. This was to go out today and we did a pre-announcement a week ago. It just so happened that our announcement went live at the same time as Google’s.”  She said she could not elaborate on what incident(s) prompted their blog post about the sophisticated attack that Adobe became aware of on Jan. 2.

Update, 5:54 p.m. ET: It seems Adobe has done an about-face on this. Adobe’s Wiebke now says the attack on its corporate systems was related to the attack on Google’s systems. Wiebke’s response to my latest “WTH?” e-mail:

“The investigation into this incident is still ongoing. What we are saying is that the incidents appear to be related given the timing of the discoveries, but until the investigation is completed we won’t be able to confirm.”

Original Post:

Incidentally, if you use Adobe Reader or Adobe Acrobat, you might want to apply the security updates that Adobe released today, available here. I will post a separate entry shortly that delves into this Adobe update a bit more.

It should be fascinating to watch the fallout from this attack in the days and months ahead. Stay tuned.