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As the question suggests, do antivirus softwares running on a local machine upload files they find malicious to their own servers for further research and is there a privacy concern here?

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It depends on the AV product. Some AV products only upload new binary hashes, others the complete binary. For some, this is a configurable option. Looking at the AV products threat intelligence feed or similar offering might reveal their strategy in this area.

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It is DNS query based. The AV software queries for the hash as a DNS query where the hash is the subdomain for the AV domain. E.g.

d41d8cd98f00b204e9800998ecf8427e.antivirus.com

Based on the response, the AV decides whether is malware or not.

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    Which ones do this? It would be nice if you added some specificity to the claim (or a citation) – schroeder Sep 12 '18 at 18:32

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