This allows advertisers to obtain a profile of your interests and thus display ads specifically tailored to your likes. Sometimes spyware scans your system to determine what you have installed. This is often done to determine, for example, if you have purchased a competing program so that a manufacturer can send you an offer for a competitive upgrade. Other spyware scans your system to ensure that you have legally purchased copies of all of their software. A list might be sent to the company.
Some spyware sends a complete hardware and software inventory to their company.
Well, first of all, you almost certainly didn't understand that it was happening. For example, I know that when I installed Gator I didn't have a clue that it would be watching the sites that I visited constantly. It took me a while to figure out that this annoying thing that kept popping up ads while I was visiting some site was somehow related to Gator. Now, admittedly this product does not do that - but the point is that easily could do so. To give you an example, suppose you let your kids use your computer.