Of course, not every bug goes down that path. Security researchers can disclose unknown vulnerabilities directly to vendors, then withhold details until the vendor issues a fix. They can also simply go public with information about the vulnerability. Or they can keep the details of the bug secret, and sell the information to the highest bidder. But if they do that, who's buying?
"Google and Microsoft can't outbid the U.S. government--they will never win a bidding war with the Army, Navy, or NSA," warned security and privacy expert Christopher Soghoian in his recent keynote speech at the Virus Bulletin 2012 conference in Dallas, titled, "The trade in security exploits: free speech or weapons in need of regulation?"
Recently, there's been a recent shift away from the old way of selling bugs, via "bug bounties and compensated responsible disclosure through firms like ZDI and TippingPoint," said Soghoian, principal technologist and a senior policy analyst with the Speech, Privacy and Technology Project at the American Civil Liberties Union. Instead, valuable bugs are now being resold by firms such as Endgame Systems and Vupen, who make no bones about the possibility that vulnerabilities might be used for espionage or even offensive operations.
What's a good bug worth? Earlier this year, Forbes profiled The Grugq, who's based in Bangkok and acts as a broker between vulnerability buyers and sellers. The Grugq, who takes a 15% commission, says he generally won't touch a bug unless it's worth at least $50,000, and six-figure deals aren't uncommon.
Security expert Charlie Miller, a former National Security Agency employee, said that he sold a Linux operating system Samba server software vulnerability in 2005 to the U.S. government for $80,000, after he was told to name a price. Although Miller now says he wished he'd asked for more money, he did admit to getting a fabulous new kitchen out of the deal.
That revelation, cited by Soghoian as the first publicly known sale of a vulnerability to the U.S. government, led to somewhat predictable banter, with The Grugq proposing via Twitter that henceforth, "[vulnerabilities] should be rated based on the number of kitchen remodeling projects they could sponsor," offering a baseline of "3 kitchens" for any malware signed with the digital certificates recently stolen from Adobe.