December 7, 2004 4:48 PM PST

Adware cannibals feast on each other

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Companies that use free software downloads to target Web surfers with annoying ads are turning on each other to keep customers--and the cash they generate--for themselves.

The tactic is in the spotlight in a little-noticed legal dispute unfolding in Seattle. Caribbean-based ad company Avenue Media last month accused New York-based DirectRevenue of using competing software to detect and delete Avenue Media's Internet Optimizer program from its customers' computers.

According to the Nov. 24 complaint, DirectRevenue's software detects Internet Optimizer and then sends a command to "kill" the program, a process that deletes its files from the PC registry and from the computer altogether. Avenue Media said DirectRevenue's tactics have caused it to lose about 1 million customers--about half its installed base--and as much as $10,000 a day in revenue.

"DirectRevenue, knowingly and with intent to defraud, exceeded its authorized access to users' computers...by automatically uninstalling Avenue Media's Internet Optimizer upon installation or update of DirectRevenue's competing browser," according to the complaint, which was filed in a district court in Seattle.

Avenue Media's lawsuit offers the latest twist in the tangled and sometimes seedy tale of programs--known as adware, malware or spyware--designed to deliver advertisements from an all-seeing and sometimes inextricable place on the PC. Though there are many useful applications for the desktop and the Web, the industry associated with it is much like the Wild West, with no real rules or self-regulation, and can taint even responsible companies.

Legal experts said Avenue Media's lawsuit is important because, if the charges hold up, it may shed light on the rights of software makers when it comes to changing users' personal PC settings. The suit also could turn up the volume on the outcry from consumers and privacy watchdogs over the plague of spyware and malware applications online.

"Once the computer is infected with 10 different unwanted programs, the person is likely to take some action to address the situation," said Ben Edelman, a researcher at Harvard University.

Edelman says he has recorded instances of DirectRevenue's software uninstalling Avenue Media's program. "Assuming you could get away with this, it could be highly lucrative."

Founded in 2002, DirectRevenue makes software to monitor Web surfing behavior and send targeted ads while people are at a particular Web site. For example, it might deliver a Hertz ad while a visitor is at the Web site of Dollar.

DirectRevenue acknowledges that it may uninstall competing applications in its user license agreement: "You further understand and agree, by installing the software, that the software may, without any further prior notice to you, remove, disable or render inoperative other adware programs resident on your computer."

It also makes Web game applications or other such software, including a plug-in to keep track of U.S government atomic time, so that people are enticed to download a bundle of applications that includes its adware. The company's software is identified by several different names including A Better Internet, BI, Twaintek and Thinstall, according to the complaint.

DirectRevenue has raised as much as $26 million from investors Technology Investment Capital and Insight Venture Partners.

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