spyware investigations

on May 4, 2005

Last week, NY Attorney General Elliot Spitzer announced a lawsuit against one of the country’s biggest Internet marketing companies, Intermix Media, Inc., in connection to their support of spyware and other forms of adware.

People are now beginning to speculate that Intermix may just be the start, as they follow the money:

“A lot of advertisers are using spyware companies,” said Assistant Attorney General Justin Brookman, who’s handling the case for Spitzer’s Internet Bureau. “Intermix is the only company sued at this point,” said Brookman. Translation: Spitzer’s team isn’t stopping with Intermix.

In fact, Brookman told me that there are as many as 30 other Web sites or companies acting as agents helping to distribute applications without consumers’ consent. One tiny company highlighted in the report, Acez Software, already settled with Spitzer’s office, according to Brookman.

“We’re not ruling out in the future going after advertisers, or Overture,” said Brookman. Yahoo’s Overture accounted for some 10% of Intermix’s revenue, said Brookman.

Yahoo would not comment.

Claria, formerly Gator, is another company that’s been accused of distributing spyware. It has said in its pre-IPO S-1 filing with the Securities and Exchange Commission that Yahoo’s Overture accounted for 31% of its sales in 2003.

This is all good news. Suing small-time companies that generate the actual spyware is not going to stem the tide. The money trail needs to be followed, and the big players need to be held accountable for providing funding and enjoying advertising revenue from this malicious software.