Leapin' Lizards! The Economics Behind DDoS Attacks And The Lizard Squad

The cybersecurity business is exploding, and not just for the good guys. Distributed denial-of-service attack (DDoS) company Lizard Squad claimed responsibility for taking down the UK’s National Crime Agency website just last week.

Macquarie analyst Mike Cikos recently took a closer look at the business of DDoS-for-hire companies.

What Is A DDoS Attack?

The goal of a DDoS attack is to make a website unavailable for its intended users for a certain amount of time by utilizing thousands of unique IP addresses.

The two general forms of DDoS attacks are those that are intended to bog down services with traffic and those that are intended to crash the service altogether.

Related Link: Hackers Claiming Affiliation With Lizard Squad Take Credit For Facebook, Instagram Outages

Booter Service

Booter service providers like Lizard Squad are companies that can be hired to perform DDoS attacks on behalf of clients for a fee. According to Cikos, the cost of a booter service subscription is surprisingly low, averaging only about $38 for one hour of attack time per month.

Well-Run Business

Cikos noted that booter services are extremely well-run organizations. “Booter service providers are remarkably well-organized and have operations similar to legal businesses, including a front-end user interface, various subscription offerings, and the ability to accept multiple payment methods,” he explained.

The wide range of attack techniques also allows the booter service providers to be extremely difficult to trace for law enforcement and cybersecurity providers.

Payment Methods

A 2013 investigation showed that more than 40 of the largest booter service providers were all using PayPal Holdings Inc (NASDAQ: PYPL) as their primary payment method. However, PayPal has been attempting to crack down on booter services in recent years, pushing them more toward Bitcoin and CloudFare.

Related Link: Cybersecurity Wins: February 2015

How To Play It

Cikos believes that the growing prevalence of DDoS attacks will force companies to shift more toward cloud-based DDos mitigation techniques, a process that will mean big business for Akamai Technologies, Inc. (NASDAQ: AKAM) and Imperva Inc (NYSE: IMPV).

Macquarie has an Outperform rating on Imperva.

Image Credit: Public Domain