Microsoft-Claria Rumors Could Be an Inside Job

By David Coursey  |  Posted 2005-07-06

Microsoft-Claria Rumors Could Be an Inside Job

There is there a battle going on inside Microsoft over the possible acquisition of Claria, the worlds largest spyware company.

Thats one of the lines of speculation that developed after the Wall Street Journal broke the story last week that the two companies are supposed to be in negotiations. And it makes sense.

The reasoning is that anti-Claria forces inside Microsoft leaked the story in hopes of killing the deal.

Indeed, the WSJ story quotes the source as saying that if there is significant bad customer reaction, Microsoft might walk away.

Thats just the sort of thing Id be sure to include in a leak if I worked at Microsoft and thought acquiring Claria would be a mistake.

That also explains why the Wall Street Journal got the call—or however the information was leaked to the newspaper—as there is hardly a larger flamethrower in the global business media. What better way to make your bosses sweat?

Maybe the "inside battle" theory is true, maybe not. But if the two companies werent talking, youd think Microsoft would issue a denial and head off the bad press.

Instead, the official word when I inquired of Microsoft PR about Claria was as follows:

"Per your questions regarding Claria and Microsoft, unfortunately, we dont comment on market rumors.

"That said, Microsoft is committed to treating all customer data with incredible care and respect. The company has strong principles around putting customers first and completely in control of their information. Microsoft has built-in processes and procedures to ensure their notice, choice and consent wherever any user data is concerned, giving customers the choice to uninstall and/or opt out."

Click here to read more about the rumors of a deal between Microsoft and Claria.

OK, so Microsoft also thinks it can rehab Clarias image, or maybe that Claria is already meeting Microsofts "built-in practices and procedures."

Why else try to reassure people that Microsoft has "strong principles around putting customers first?"

Spyware researcher Ben Edelman reports that the free Microsoft Anti-Spyware program no longer recommends Claria be removed from the systems it scans.

If Microsoft is serious about Claria, thats something theyd do. And its a neat trick: Remove everyone elses spyware while leaving your own in place.

Microsoft says Clarias status was changed in March, but refuses to explain why. The company said it makes no public comment on why any software is or is not included in its anti-spyware product.

Questions are referred to a document that explains the listing criteria.

That may be a good policy for independent anti-spyware companies to follow, but Microsoft has huge conflicts-of-interest.

Next Page: Conflicts and a change of status.

Conflicts and a Change

of Status">

Among them: Microsoft sells advertising, as do spyware companies; spyware may compromise Microsofts ability to display the ads it sells; and, of course, Microsoft may be buying a spyware company.

Since Microsoft competes with spyware, it seems the company should go to pains to demonstrate its not merely using anti-spyware as a tool to protect (or enhance) its MSN revenue.

Some people still wonder whats so evil about Claria and may not realize the company had to abandon its old name, Gator, in response to bad publicity and lawsuits.

According to Edelmans research, "Clarias installation practices are troubled—tricking users with ads that look like Windows dialog boxes, touting features Claria knows users dont need (like clock-synchronizers already built into current versions of Windows). And in Clarias oft-installed bundle with Kazaa, Clarias long license lacks section headings, making it exceptionally hard for users to figure out what Claria does or to reasonably assess Clarias terms."

Since Microsoft has changed Clarias status, we must assume—since Microsoft wont say—that Claria no longer violates its spyware standards. (See link above).

Claria has a huge Oracle database, supposedly 120TB in size, of user behavior, gleaned by tracking Web users who have downloaded its software. This information is used to deliver ads based on what Web sites the user visits, sometimes in ways that could confuse the user as to where the ads came from.

Edelman says Microsoft would be better off building its own ad delivery software rather than purchasing a company with Clarias controversial past and present.

There is no getting around that Clarias 120TB of user information is tainted by how it was acquired.

Yet, it may be the companys main asset since, presumably, Microsoft would have to clean up Clarias distribution scheme and could develop its own software for a lot less than Clarias reported $500 million price tag.

What do I think is going on?

1. It would not surprise me if anti-Claria partisans within Microsoft leaked the story in an attempt to stop the deal.

2. I think Microsoft wants to buy Claria. I hope they can be dissuaded from doing so.

3. If Microsoft buys Claria, I believe Microsoft will legitimize its business practices, though what Microsoft considers legitimate and what Ben Edelman would consider legitimate may still be at odds.

4. I believe Microsoft does protect customer data and tries very hard to be a good steward of that data. I dont believe Microsoft would attempt to mislead customers the way spyware firms do routinely.

However, Microsoft has shown itself to be tone deaf where privacy is concerned, thinking that its good intentions should be obvious.

To read more insight about Claria from David Coursey, click here.

Microsoft owes it to customers to explain its interest in Claria and tell them whether a deal is in the works.

If so, Microsoft needs to explain Clarias past, current, and future business practices.

But, if the choice were mine, Microsoft would just apologize for creating some unnecessary excitement, take a pass on Claria, and get on with business.

Or maybe I have this entirely wrong and Microsoft wants to buy Claria just to put it out of business and remove a major spyware company from the world.

Now, thats what Id call "putting customers first."

Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at

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