Network security: Allow Local System to use computer identity for NTLM

Article
11/14/2012

Updated: November 15, 2012

Applies To: Windows 7, Windows Server 2003, Windows Server 2008, Windows Server 2008 R2, Windows Vista, Windows XP

This security policy reference topic for the IT professional describes the location, values, policy management, and security considerations for this policy setting.

Reference

When services connect to computers that are running versions of the Windows operating system earlier than Windows Vista or Windows Server 2008, services that run as Local System and use SPNEGO (Negotiate) that revert to NTLM will authenticate anonymously. In Windows Server 2008 R2 and Windows 7, if a service connects to a computer running Windows Server 2008 or Windows Vista, the system service uses the computer identity.

When a service connects with the computer identity, signing and encryption are supported to provide data protection. (When a service connects anonymously, a system-generated session key is created, which provides no protection, but it allows applications to sign and encrypt data without errors. Anonymous authentication uses a NULL session, which is a session with a server in which no user authentication is performed; and therefore, anonymous access is allowed.)

You can configure the Network security: Allow Local System to use computer identity for NTLM security policy setting to allow Local System services that use Negotiate to use the computer identity when reverting to NTLM authentication.

If you do not configure this policy setting, services running as Local System that use the default credentials will use the NULL session and revert to NTLM authentication for Windows operating systems earlier than Windows Vista or Windows Server 2008.

Possible values

Enabled

Services running as Local System that use Negotiate will use the computer identity. This might cause some authentication requests between Windows operating systems to fail and log an error.
Disabled

Services running as Local System that use Negotiate when reverting to NTLM authentication will authenticate anonymously. This was the behavior in previous versions of Windows beginning with Windows 2000.
Neither. This results in the behavior of previous versions beginning with Windows 2000. Services running as Local System that use Negotiate when reverting to NTLM authentication will authenticate anonymously.

Location

GPO_name**\Computer Configuration\Windows Settings\Security Settings\Local Policies\Security Options**

Default values

The following table lists the actual and effective default values for this policy. Default values are also listed on the policy’s property page.

Server type or Group Policy object (GPO)	Default value
Default domain policy	Not defined
Default domain controller policy	Not defined
Stand-alone server default settings	Not defined
Domain controller effective default settings	Not applicable
Member server effective default settings	Not applicable
Effective GPO default settings on client computers	Not defined

Operating system version differences

This policy was introduced in Windows Server 2008 and Windows Vista, and it applies to authentication connectivity between these versions and later versions of the Windows operating system.

Policy management

This section describes features and tools that are available to help you manage this policy.

Restart requirement

None. Changes to this policy become effective without a computer restart when they are saved locally or distributed through Group Policy.

Policy conflict considerations

The policy Network security: Allow LocalSystem NULL session fallback, if enabled, will allow NTLM or Kerberos authentication to be used when a system service attempts authentication. This will increase the success of interoperability at the expense of security.

Group Policy

This policy setting can be configured by using the Group Policy Management Console (GPMC) to be distributed through Group Policy Objects (GPOs). If this policy is not contained in a distributed GPO, this policy can be configured on the local computer by using the Local Security Policy snap-in.

Security considerations

This section describes how an attacker might exploit a feature or its configuration, how to implement the countermeasure, and the possible negative consequences of countermeasure implementation.

Vulnerability

When a service connects to computers running versions of Windows earlier than Windows Vista or Windows Server 2008, services that run as Local System and use SPNEGO (Negotiate) that revert to NTLM will use NULL session. In Windows Server 2008 R2 and Windows 7, if a service connects to a computer running Windows Server 2008 or Windows Vista, the system service uses the computer identity.

When a service connects with the computer identity, signing and encryption are supported to provide data protection. When a service connects with a NULL session, a system-generated session key is created, which provides no protection, but it allows applications to sign and encrypt data without errors.

Countermeasure

Potential impact

If you configure this security policy setting, the system allows Local System services that use Negotiate to use the computer identity when reverting to NTLM authentication.