After moving on from Enron, New York State Attorney General Eliot Spitzer now is aiming his sights squarely at the adware and spyware industry. His office on Thursday announced that it is suing Internet marketing company Intermix Media, alleging that it surreptitiously installed adware and spyware on millions of personal computers.
“Spyware and adware are more than an annoyance,” Spitzer said in a statement Thursday. “These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers efforts to remove them from their computers.”
The attorneys office said Los Angeles-based Intermix Media Inc. offered free software downloads such as screensavers and toolbars, but along with those downloads, secretly installed ad-delivery programs to “its unsuspecting users.”
The office is seeking heavy penalties against Intermix. It hopes to prohibit Intermix from installing any advertising, ad-serving, redirecting or toolbar programs, and to make the company provide all records of prior installation of such programs, account for all revenues derived from the distribution of such programs, and pay $500 for each instance of a “deceptive or unlawful practice.”
Spyware and adware industry watchers applauded Spitzers move.
“This is hugely important because the New York attorney general is going after an adware firm not for stealth installs, but for run-of-the-mill, sleazy installation practices that are quite common with adware firms,” said Eric Howes, a spyware researcher at the University of Illinois at Urbana-Champaign.
He said those include installation and uninstallation practices, system reconfiguration and various advertising practices that attempt to deceive users.
“We all cheered when we saw the story,” said Jim Slaby, a senior analyst at The Yankee Group in Boston. “Like him or hate him, [Spitzer is] one of us. Any kind of action and help that enterprises get in battling spyware is welcome.”
For its part, Intermix denied wrongdoing in a statement released Thursday.
“Intermix does not promote or condone spyware, and remains committed to putting this legacy issue behind it as soon as practicable,” Christopher Lipp, senior vice president and general counsel at Intermix, said in the statement. “Many of the practices being challenged were instituted under prior leadership, and Intermix has been voluntarily and proactively improving these applications for some time.”
The company argued that the “redirect” and “toolbar” applications under challenge are similar to those marketed by other major Internet companies. Such applications let users conduct searches without going to a specific Web site, and sometimes include pop-up blocking software.
Intermixs redirect application, meanwhile, takes effect only when a user misspells a Web site name or a site cannot be found. Intermix said it quit distributing KeenValue, one of the ad-serving applications cited by the attorney general, in 2003. Earlier this month, the company also ceased distribution of its redirect and toolbar applications pending the ongoing investigation by the attorney general.
Richard Stiennon, vice president of threat research at Webroot Software Inc. in Boulder, Colo., and a former security analyst, said he isnt buying it. He said KeenValue is on the anti-spyware companys most-current list of the top 10 spyware threats, and shutting it down doesnt clear Intermix of wrongdoing.
“If you could avoid prosecution by changing ownership and stopping practices, then Enron would still be a very viable business, and Bernie Ebbers wouldnt be facing jail time,” Stiennon said.
Spyware researcher Howes said the allegations have little to do with the spyware activity Intermix references, and said that is an argument commonly used by adware vendors to distinguish them from truly malicious code. And Yankees Slaby said the company had ample time to negotiate with Spitzer and was unable to come to an agreement.
“Despite what the adware industry would have you believe, the key issue isnt just data collection and transmission,” Howes said. “The attorney general has blown right past the spyware versus adware distinction by focusing on a broad range of deceptive and objectionable practices.”
According to analysts, thats where the case could get interesting.
“The line between protected trade and business practices of dubious nature is less than clear-cut,” Slaby said. “Where do you draw that line between legitimate advertising and criminal activity?”
In addition to pointing out Spitzers penchant for headline-grabbing moves, Gartner Inc. research director Rich Mogull said the attorney general may only be trying to get some distinction between the two in court.
“Intermix may be in that gray area,” Mogull said. “It kind of surprises me that they were picked on before some of the really nasty stuff. I wouldnt be surprised if this case falls apart, but what this might do is give us some clarification and force them to change their practices.”
Webroots Stiennon disagreed: “Hes picked a target that uses not-so-nice techniques for installing adware. I dont think its a gray area at all. I think Spitzers on pretty safe ground there.”
But all agreed that its an incredibly important development for consumers and enterprises.
“Theyll get their day in court, and well follow this one very carefully,” Slaby said. “Theres a lot at stake here.”
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