Microsoft has revealed a sophisticated phishing campaign where attackers reportedly used artificial intelligence to create malicious code capable of bypassing traditional security filters. Detected and blocked on August 18 by Microsoft Threat Intelligence, the attack primarily targeted U.S.-based organizations and leveraged Large Language Models to generate complex phishing payloads.
The operation began with a fraudulent file-sharing email sent from a compromised small business account. The email appeared as a routine corporate communication and included what looked like a 23MB PDF file. In reality, the attachment was an SVG file, a format often overlooked by users and some security tools.
The malicious code was hidden within a business analytics dashboard, complete with charts and visuals. Instead of using obvious obfuscation, the payload encoded itself with common business terms such as “revenue,” “operations,” and “risk,” making it appear harmless. Once opened, the file redirected users to a fake sign-in page designed to steal login credentials.
Microsoft researchers determined that the code’s verbosity, complexity, and lack of practical utility indicated it was likely generated by AI rather than written manually. Microsoft used its AI defense tool, Security Copilot, to analyze the over-engineered structure and confirm AI involvement.
Despite the sophistication, Microsoft’s Defender for Office 365 successfully blocked the attack. Its AI-based protection flagged behavioral red flags, including self-addressed emails with hidden BCC recipients, unusual file type and name combinations, and redirects to known malicious sites.
Security experts emphasize that AI-driven phishing is changing the cybersecurity landscape. Anders Askasen, VP of Product Marketing at Radiant Logic, said, “The frontline isn’t the payload, it’s the person behind the login.” Andrew Obadiaru, CISO at Cobalt, added that AI-generated phishing “blends seamlessly into enterprise workflows,” urging companies to invest in behavioral detection, AI-aware red teaming, and faster remediation cycles.
While Microsoft campaign was limited, it signals a new era where cybercriminals use AI to create stealthy, business-like code. Organizations will need advanced AI-driven defenses and continuous monitoring of user behavior and identity activity to stay ahead of these evolving threats.
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