April 8, 2005 11:23 AM PDT
Deal may mean shifting adware model
180Solutions has been working over the past few months to overcome persistent criticism of its business model, including accusations that its distributors use security flaws in Microsoft Windows and misleading pop-up boxes online to trick people into downloading the software.
By purchasing CDT, one of its largest distributors, 180Solutions says it's hoping to "clean up" its distribution channels.
"One of the challenges with the business model in our space, where we work with distributors and affiliates, is that we don't have as much control as we like," said Todd Sawicki, director of marketing for 180Solutions. "This will give us more direct control over how our software will be downloaded."
The acquisition may portend similar deals for a layer of advertising companies that are struggling for respectability in a market characterized by unregulated and often misleading business practices.
Like rivals Claria and WhenU, 180Solutions produces software that, when installed, collects information on a computer user's Web surfing habits and delivers ads that are in theory targeted to that person's interests.
Over time, it and other companies have used a variety of means to get this software to consumers, including paying distributors and affiliate Web sites for downloads. Third-party distributors often bundle several of these adware programs into a single package, and can be extraordinarily misleading in the ways they persuade consumers to accept the downloads.
Adware and spyware researcher Ben Edelman said he has seen CDT use pop-up boxes on Web sites that mislead consumers into thinking they have to accept the ad software downloads in order to view the site's content, for example.
In the past, CDT has distributed several programs alongside the 180Solutions software, including a search toolbar from a company called Integrated Search Technologies that often displays pop-up pornographic advertisements. Many security companies, including Symantec, treat CDT and this toolbar as a single entity.
Sawicki said that CDT had solely been a distributor for the adult toolbar and other programs, and that the company would stop bundling all non-180Solutions software within the next month.
Independent Net marketing analyst Kent Allen said the deal reflects 180Solutions' desire to eliminate some of its partners' abusive practices, and could well trigger similar consolidation drives from other adware vendors.
"One of the missteps they may have made in the early years was to not watch their distribution channel closely," Allen said. "They realize that there is a public perception they need to deal with."
The company has made other efforts to shore up its reputation in recent months, including the creation of a "Code of Conduct" for its distributors and the introduction of a set of lawsuits against distributors that it said downloaded its software to computers without proper consent.
180Solutions joined the Consortium of Anti-Spyware Technology Vendors early this year, changing the way its software functions to satisfy the group's requirements. Several security companies nevertheless resigned from the trade group to protest 180Solutions' membership.
Some critics remain skeptical of the company's efforts. Edelman said he has seen third-party distributors install 180Solutions software by taking advantage of Windows security holes as recently as the last several weeks.
"You never see the Google toolbar installed this way," Edelman said. "Google is much more careful about who they partner with."
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