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Spyware installs itself on your computer after being contracted from a website or banner ads, where it secretly collects information about you and your computer, floods you with pop-ups, etc. Multiple instances of spyware can make your computer run about the same speed as Doom 3 on an Atari 2600. Also one of the main reasons so many people have stopped using Internet Explorer. Somewhat similar to a virus, but is rarely as damaging as one.
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