MS Office secretly connects to my Mac and scans my activity. How??? Security hole? Exploitable by hackers?

Question

I have a strange problem. All by itself it's not so serious, but it concerns me that it reveals a security hole which can be exploited by hackers.
I may be over-reacting, so any reassurance or explanation would be appreciated.
Here's the situation:
I have a MacBook Pro running OSX 10.6.5. I also have a new MacBook Air also running 10.6.5. I recently used Migration Assistant to move all my applications from the MacBook Pro to the MacBook Air. The migration worked fine with one very troubling exception.
One of the applications that got migrated was MS Office 2008 (MSWord, Excel, etc.). When I just had my MacBook Pro, MS Office worked fine. Also, now, if my MacBook Pro is turned off and I'm just using my Air, MS Office again works fine.
HOWEVER...if I have my MacBook Pro open and running MS Office on it, and then I simultaneously open my Air and try to launch MS Office, I get an error message that says
"Microsoft Office 2008 for Mac cannot start because Microsoft Office is already in use.
An office program is being used by Apple Mac. Your installation exceeds the number of installations permitted by the license agreement."
However, if I then "Quit" MS Office on the Pro, and then try to launch it on the Air, I don't get the error message, and it works as normal. The same thing happens if I switch computers -- if it's running on the Air first, then I can't launch it on the Pro. Basically, only one of the computers can run MS Office at any one time.
Now, the issue about the MS license agreement is not what concerns me -- I guess the version of MS Office I bought back in 2008 was only supposed to be installed on one single computer, and never migrated to a new computer (I eventually plan to use the Air full time and retire the Pro). I'm probably going to get a newer version of MS Office eventually anyway, and also I almost never use both computers at the same time, so I'm not worried about being unable to use MS Office on both computes simultaneously. No, what worries me is this:
How does MS Office on one computer even know that my other computer is running and has MS Office open?
I'm not an expert on networks and sharing and connectivity and all that, so excuse me if I use inaccurate terminology, but...:
Both computers connect via AirPort to a cable modem and thus share the same wifi hotspot to connect to the internet.
But as far as I can tell, the two computers are not "connected" to each other. In the System Preferences for both computers, in the "Sharing" panel, all File Sharing is off. Also, none of the sharing boxes are checked.
Neither computer shows the hard drive of the other on its Desktop. If I wanted to, I could use Finder's "Go" menu, choose "Connect to server," then "Browse," then find the other computer, double-click on it, type in the admin password, and then connect the two computers. But I haven't done that, and MS Office is able to see what the other comoputer is doing, even when they aren't connected in any way (as far as I can tell).
I find this pretty disturbing. How in the world does the MS Office on one computer even know that the other computer exists? Furthermore, how does it know that the other computer is on and running? And lastly and more importantly, how does it know which programs are running on the other computer?
One extra detail: in order to try to diagnose this odd behavior, I installed a program called "Little Snitch" which monitors all network activity and notifies the user whenever any malware programs or other sneaky behind-the-scens apps try to send data over your connection without your knowledge. Little Snitch seems to work great but when I test the problem after installing it, Little Snitch did not even detect or report that MS Office was doing any surreptitious network snooping. So whatever MS Office is doing, it's doing it pretty sneakily.
Here is my worry: Could a hacker somehow exploit this capability of MS Office to monitor activity on my computer without my being aware of it? Or could someone re-adapt this snooping code from MS Office for more nefarious purposes?
Or am I completely misapprehending the situation somehow?
Any  reassurance or explanation would be greatly appreciated! Thanks.

Answer 1

But my question is: How does the software do that?
It scans the local network for computers trying to "share" software that is only supposed to be licensed for one computer. I can't give you a technical answer, I can just tell you that's what it's doing.
then what's preventing less ethical coders from deploying similar but more sinister malware with the same capability?
Nothing. Any vendor of any software, from a one person shareware or freeware app to a company the size of Apple, Microsoft or Adobe could sneak in damaging code. Any company that wants to stay in business though would never allow it.
In a typical software company (particularly larger ones), you have not only the people who write the code, but also system analysts who review the code looking for flaws or anything else that shouldn't be there.
Now I have the fear that if I'm using a wifi hotspot in a cafe or wherever, someone else with hacking skills on that same hotspot could basically see what I'm doing on my computer, without my knowledge.
The software to pry (they hope undetected) into other folks' computers on an open network like that has been around for years. That's why you at least need to have your firewall enabled when using a wifi hotspot.