June 30, 2005 1:16 PM PDT

Microsoft said to be mulling purchase of Claria

Microsoft is in discussions to buy controversial adware maker Claria, sources say, in a move to own an advertising network to compete with rivals Google and Yahoo.

Whether a deal will happen is unclear, according to sources familiar with the talks. But in the event that it does, Microsoft would likely face guff from consumer watchdogs for buying a company known for tracking Web surfers and delivering annoying pop-ups. (Microsoft's MSN Internet arm stopped selling pop-ups more than a year ago.)

Representatives for Microsoft and Claria declined to comment on any talks.

Strategically, a buyout would give MSN several key assets. First, the Internet portal would acquire an advertising network that sells and targets promotions to people outside the MSN Network--holdings that rivals Google, Yahoo and America Online already own. As online ad sales grow by more than 30 percent annually, that is increasingly important.

"MSN can use Claria to extend its existing advertising relationships."
--Charlene Li, analyst, Forrester Research

"Like AOL buying Advertising.com (last year), MSN can use Claria to extend its existing advertising relationships," said Charlene Li, an analyst at Forrester Research.

Second, MSN would acquire technology to personalize advertisements--search ads, banners or pop-ups--as well as tailor content to Web surfers. Personalizing the consumer Web experience is an ambition of all of the major portals, including MSN, so that people grow more loyal to one service over another.

Finally, MSN would gain access to a system with in-depth knowledge of consumer behavior on the Internet. Claria's software is installed on an estimated 40 million desktops and is designed to monitor people's actions, behaviors, likes and dislikes in order to display targeted ads. The company also operates a research division that extrapolates consumer habits over the long term. The New York Times first reported the story.

Still, Claria, formerly Gator, has a sullied history with publishers, advertisers and Web surfers. Long equated with pop-up ads, the Redwood City, Calif.,-based company makes downloadable software that's often bundled with and supports free applications like peer-to-peer file-sharing network Kazaa. It monitors surfers' habits and displays ads as they traverse the Web.

For example, it might show a pop-up page of Yahoo search ads after a user types in a search term at Google. Displaying competitive ads atop rival Web sites is one of its trademark practices and has drawn the ire of publishers such as The New York Times and major advertisers such as Wells Fargo. Claria has settled legal complaints out of court.

In the last two years, Claria has labored to overhaul its image and products. It renamed itself, published a set of best practices for adware makers, and most recently, said it has terminated a distribution deal with longtime partner Kazaa. Claria spokesman Scott Eagle said the company gave Kazaa "notice of termination" two weeks ago.

Claria has faced a lot of criticism over how it disseminates its software onto desktops, including bundling with software like Kazaa in a way that is unclear to consumers what they're getting. The company pulled its IPO plans last year.

Claria is also introducing new products that leverage its software's innate ability to track people. It has launched a product called Behaviorlink, which is designed to study consumers' habits online and then swap out untargeted ads on Web sites for targeted display ads. With the service, Claria is attempting to partner with major publishers, like MSN, to expand the number of people in its network to optimize how and when ads are shown, so they get a higher rate of consumer response. Claria also is proposing a similar service for search and personalized content.

"For this to work, it has to be on hundreds of millions of desktops so there's an improved consumer experience in advertising, search and content," Eagle said.

For MSN's part, the company has already shown interest in personalized services for its visitors. The Internet portal launched Newsbot, a news site that people can organize to their interest. It's also testing a personalized home page service called Start.com, which lets people aggregate RSS (Really Simple Syndication) feeds from across the Web. And it has introduced the MSN AdCenter, which gives advertisers the ability to research consumer behavior before planning and running a campaign.

"We think the space is important; we're interested in the idea of deeply personalized and customized Web experiences that increase the relevancy of the information people get," according to a Microsoft representative. But the representative added that the company, in whatever it does, will set rigorous controls around its products and services that give people the choice to opt in or out or restrict data that's collected.

14 comments

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What MS cant develop they buy
Nothing new here.
Posted by Jonathan (832 comments )
Reply Link Flag
what are you talking about?
why would they want to develop adware and spyware which locks up your computer and makes people hate you? This is why Gator changed their name to Claria, but we still know who they are and remove their crap with adware and spyware removers. Philosophically this is Microsoft's kind of company. Evil understands evil.
Posted by ChazzMatt (169 comments )
Link Flag
Buying Gator (Claria) is a bad move
As Gator initially and still occuring under the Claria brand name this particular company made it's profits by theft (computer resources, network overhead, devalaution of legitimate advertisements).

If MS buys this company then they also buy responsibility for those thefts.
Posted by aabcdefghij987654321 (1721 comments )
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This is completely Insane
So, if we take it to mean that Microsoft is buying Gator/Claria, because they want to get a better understanding of crapware, it shows that they do not know their own software well enough to figure out how it works.

If we are to assume that Microsoft is buying Gator/Claria to put them out of business, it is a time to rejoice that MS would get rid of one of the biggest scumware producers.

But, we all know that shareholders would flip out if Microsoft bought a company just to run them out of business. Oh, wait, Microsoft does that all the time.
Posted by SteveBarry687 (170 comments )
Reply Link Flag
I guess they want the technology...
Maybe what Microsoft has planned is a new version of Windows. A version that isn't based on programs and parts of programs coming up in a Window but instead a pop-up with advertising. You know it would be like being in a room full of jack in the boxes all of them going off and popping up at the same time. Now that is innovation.

Robert
Posted by (336 comments )
Reply Link Flag
This can be a good or bad move
This could be a good move if Microsoft plans on using this
technology to better there new OS. In retrospect, if Microsoft is
just buying this for the technology, then they are essentially
going to commit the same crimes that Claria has committed in
the paste.

I'm a web developer that has picked apart Claria and it's various
spyware programs like Gator, Dashbar, and PrecionTime just to
name a few. Not only have I picked them apart, I have removed
them also (those that can be removed).

If you remember back some time, Gator E-Wallet was criticized
for being unable to uninstall the program to the point were the
uninstall information was buried deep in Claria's website. This
isn't the only program that is a pain to uninstall, the rest are just
as painfull.

BehaviorLink is a whole different story, and if you check out the
site www.behaviorlink.com, and do the demo under the
advertise link, you will notice something that just isn't right.

You will see and animation that tracks you surfing habbit
beginning with online stock prices and escallating to your email
and bank accounts. Yes, email and bank accounts, lets just track
passwords and account numbers for advertising purposes!

So lets just let Microsoft track our Emails and Bank accounts,
sounds like a great idea right, wrong. Claria is just plain bad,
and is also the butt of a Spyware Report that I'm working on.

Not only am I a web developer, I'm also a super Microsoft fixit,
tech guy, that has been removing spyware for 3 years now on
Microsoft machines.

In the last year and a half, it has gotten so horrible; to the point
were machines die because Claria's software is so poorly written,
that it vies for bandwidth before you even get a connection.

Spyware has been the machine killer for over a year now,
surpassing that of any virus made. And Microsoft wants this
company.

How about releasing a stable operating system that doesn't put
everybody at risk for identity theft. Dosen't that sound like a
good idea Billy, and Steve-O. Our you could do what I did and
Go Buy a Mac.

Something to think about.
Posted by OneWithTech (196 comments )
Reply Link Flag
most of your post is good...
but the first sentence threw me. there's NOTHING about Claria that could improve Microsoft's OS. it's software more poorly written than Windows.

The rest about adware/spyware being the computer killer, yes. And Claria/Gator is on the forefront of that. Does this mean that Microsoft's new anti-spyware will not recognzie Claria/Gator?

The foxes have taken over the henhouse.
Posted by ChazzMatt (169 comments )
Link Flag
Understand: Spyware is Good
Hey look, I know you think Claria's spyware is a bad thing. But look at it from their perspective. They want to know about YOU. Every keystroke, porn site, password, bank account, credit card or poem you key in is monitored and understood. And we all want to be understood, right?

That's why Brother Gates is going to buy Claria, so he can understand you and bond much more closely with you than anyone else ever will in your life.

Sounds like a fun future, eh?

PS- time for me to move to a Mac and Linux. Bye-bye Redmond.
Posted by R. U. Sirius (745 comments )
Link Flag
Microsoft and Gator are two of a kind
This story upsets me more than you realize. yes, Claria (Gator) is Microsoft's kind of company. That's the kind of company Microsoft understands. Evil with evil.

And most of these analysts act like it's a simple business transaction. Have these people ever tried to get Gator pop up ads OFF a computer? I have so many friends who don't understand why their computer is locked up and useless and where all the ads are coming from -- it's coming from their own computer because companies like Claria (old name Gator) tricked them into downloading something or downloaded something without their permisson. Yes, that's just Microsoft's kind of company.

In fact, Gator has such a bad reputation, they changed their name to Claria. Just as Philip Morris (who makes cigarettes) changed their name to WeReallyDon'tKillPeopleOnPurpose to soften their image. OK, they really changed their name to Altria. But my version is the English translation. :)

"For this to work, it has to be on hundreds of millions of desktops so there's an improved consumer experience in advertising, search and content," Claria spokesperson Eagle said.

Oh, like maybe pre-installed in the next version of Windows (Longhorn)? I just can't see people standing for that.

Remember when Microsoft tried to take over all websites with their "smart tags" -- not only in Office but also in IE? (They were forced to strip it from IE, but left it in Office. I still have to turn it off on every computer I install Office.) but, they arrogantly thought that just because you were using THEIR browser to view websites that gave them permission to change all the content of those sites in your browser so all keywords they chose would show links to Microsoft owned or affiliated sites. so, if you were on a Honda car site, words in the text like "automobile performance" might have a Microsoft link generated (through IE) that would actually take you to a GM site, if GM paid Microsoft enough money.

And Microsoft genuinely didn't understand what was wrong with that. First, it was deceptive to the users. They wouldn't know that Honda wasn't sending them to a GM site. They might be confused about it, but there's the link, you know? (or it might be sending them to a car accessories site, but still it's not what HONDA was doing, it was Microsoft). Second, it was bastardizing the original website. Honda paid money to have it designed the way they wanted it designed, and here Microsoft's software was rendering it the way Microsoft wanted -- redesigning it, in effect (adding links or "smart tags" to key words to generate more money for Microsoft). They still do the same with Office. In Outlook, you will sometimes see little purple lines under some words. Those are smart tags. Links that Microsoft has generated to take you to Microsoft owned or affiliated companies. They had to strip the smart tags out of IE "for now" (but that's been 3 years ago) but they left it in Office. they defended themselves by saying they were only trying to enhance the user experience, blah, blah, blah... See, same rationale as Gator.

With Claria/Gator and similar outfits you download some silly little thing on your computer like smiley icons or a movie screen saver and suddenly that gives Gator permission to inundate you with pop-up ads every time you try to check your webmail or go to almost any site. Or if you try to go to Google to search for something, somehow you are whisked away to another search site. And the Gator software uses your internet connection to send information back to Gator telling them what you are doing on the internet and then uses your bandwidth to download MORE ads to throw in your face. Yes, this is a perfect match for Microsoft. They want to control you and control your computer to generate more money, and they defend it by saying they are trying to "enhance the consumer experience".
Posted by ChazzMatt (169 comments )
Reply Link Flag
The foxes have taken over the henhouse.
Does this mean that Microsoft's new anti-spyware will not recognzie Claria/Gator and try to remove that crap?
Posted by ChazzMatt (169 comments )
Reply Link Flag
Of course
Of course Microsofts anti-spyware software wont recognize Claria. After all it cant be spyware if its owned by Microsoft.

The real reason Microsoft is buying Claria in my opinion is so they can learn from a master how to violate peoples privacy for profit and get away with it.

It will probably show up as part of a "critical update" soon, hidden on your machine somewhere and tied to the OS so it cant be removed (like Internet Exploder).
Posted by Fray9 (547 comments )
Link Flag
If Microsoft uses Gator, I'm Going Linux
I have been a loyal Microsoft user ever since the days of Windows 95, and I have loved every minute of it. This idea of MS buying Claria, however does not sit well with me. If Microsoft buys it to shut it down, great, BUT if Microsoft buys Claria to USE it to display ads or make money, I may just go Linux. Can you imagine, Windows Update, Available updates...

- Security Update
- Security Update
- Claria AdWare

With millions of Windows Users using Windows Update, and having it update automatically without user confirmation, the DEFAULT SETTING, MS could put the claria client Gator into the update queve and "infect" EVERY SINGLE WINDOWS USER WITHOUT A USER'S CONSENT!!! Oh My God!!! Seriously, I have no experience with Linux, and I love Windows, but If MS Buys and USES the claria cra*ware, I am seriously going LINUX!!!!!

BMR777
<a class="jive-link-external" href="http://www.rusnakweb.com" target="_newWindow">http://www.rusnakweb.com</a>

Claria Execs = Satan on Earth
Posted by BMR777 (61 comments )
Reply Link Flag
Excellent, Microscum Goes into Spyware
This is truly a day to rejoice. Finally we will get a spyware company officially married to my favorite monopoly. Think of the great things in store for us:

* Spyware will now be part of every new service pack. No need to go to other third parties for that junk anymore.

* Once the Spyware is on our machines, Microscum will sell us security software to remove it. Hey, great for my stock price.

* After the Spyware is removed, it will be reinserted in the forthcoming service pack. Ooh, better upgrade my security software. Fun!

* And if I don't buy the security software, well then my favorite monopoly will follow my every move and then offer to sell me more stuff.

This is gonna be so much fun. Just like Stimpy, I can hardly contain myself!
Posted by R. U. Sirius (745 comments )
Reply Link Flag
Out of despair...
Rarely do I feel compelled to comment on a news item, yet Microsoft's intended purchase of Claria hints of desparation, surely then can not be so worried about loosing market share that they must resort to unwanted advertising to boost their finances.

Indeed, their recent annoucements all hinted towards greater control of such unwanted annoyances (pop-up advertsing, SPAM and malicious code) within their future products, whereas if they are to purchase Claria they stand to become the sower of the seeds they aim to kill. An interesting conundrum.

If only Microsoft could learn to concentrate on what they do best - desktop productivity - and leave everything else well alone the IT environment would be a far better place.

This is without doubt one of the most ludicrous and potentially damaging moves that Microsoft has attempted.
Posted by graham_uae (1 comment )
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