From LQWiki

Spyware can mean:

1. Software which, when installed by a user insufficiently enlightened to avoid it, enables third parties to snoop the user's hard drive or monitor their network transactions. Though the term seems to have entered use in the late 1990s, it achieved real popularity as applied to Microsoft Windows XP. Some back door features in XP permit Microsoft to (for example) covertly scan your disk directories for the names of files it might deem to be warez.
2. Systems for spying on email and web traffic, such as the FBI's Carnivore.

One of the main reasons for spyware is to report back surfing habits for marketing purposes. Because of this, spyware is now nearly synonymous with adware. Linux, with the exception of cookies (which also have non-evil uses) is largely immune to spyware. Partly this is because of its resistance to other forms of malware, but mostly because the use of open source eliminates such back doors.

This article is based, in whole or in part, on entry or entries in the Jargon File.