July 29, 2004, 12:00 AM

The shoot-out over spyware

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While it’s obvious that retailers object to competing offers served on their own sites, adware’s opponents also say it raises issues for consumers. “I think of adware as applications that make their way onto your computer and barrage you with unwanted pop-up advertising,” says Shawn Schwegman, vice president of technology at Overstock. “Spyware can do the same thing and also capture and distribute information about the user that would otherwise be private, such as browsing habits or credit card information. The lines are very blurred because many do both.”

One especially contentious issue is that of exactly how adware gets attached to consumers’ computer browsers. Typically, that happens when the software is bundled in with other free applications a consumer wants to download, such as the ability to share music files. In such cases, Stein’s opinion is that an ad network’s claim that consumers “opt in” is closer to “acquiescing in.” He says, “It’s not the same as when you go to Delta.com and sign up because you want them to tell you when they have supersaver fares. It’s more like, ‘I’ll take this because I really want Kazaa.’ You’re really looking for something else.”

LinkShare’s Messer calls the bundling of software a slippery slope. “If you ask people, do they want to download coupons, who is going to say no?” he says. “But they’re not really clear on what they’ve said. It’s like a mechanic who asks if you’d like a better-running engine and then replaces your whole engine. If you give people some of the facts and then bury the bad stuff, have you really given them the ability to make a decision?”

Clear instructions

Ad-serving networks WhenU and Claria say language telling consumers what they are downloading and directions for uninstalling their ad-triggering applications are clearly available to consumers. Claria also initially wraps the ads it serves in a border that identifies them as ads from Claria after consumers first download the software, according to Stein. Subsequently, the border appears again, around PSAs served by Claria.

But many argue current adware disclosure practices still leave consumers in the dark. “A lot of times people don’t read the entire end user license agreement,” says Lydia Leong, an analyst with Gartner Dataquest. “They are not necessarily aware that the software they install that otherwise seems helpful is also going to be displaying advertising. Some of these advertisers are responsible in that they clearly mark on the ad a logo that shows where the ad is coming from, and yet users are still confused.”

Drive-by downloads

Beyond adware that attempts to identity itself to consumers is adware that can install itself completely on the sly, like a virus, by exploiting security holes in the user’s browser. A practice few would argue is anything but unethical, the industry has dubbed it “drive-by downloads.” Post-market browser enhancements such as ActiveX controls that can be added to Internet Explorer offer a window through which drive-by downloads can occur.

“ActiveX controls are add-ons to Internet Explorer that enhance browser functionality. The generic installation of Internet Explorer has certain features and enhancements bundled in, but some web developers build into sites additional features and functionality not commonly installed with Internet Explorer,” says Schwegman. When the user goes to those sites, if Internet Explorer detects the user’s browser doesn’t have the functionality needed to run a feature-Macromedia Flash, for instance-it pops up a window asking the user for permission to download that extra capacity.

The same process can be used to sneak adware onto browsers. According to Schwegman, some advertising networks pay bounties on adware installed on users’ browsers. “They are supposed to police this, but there are distribution partners who want to make a bunch of money who will use these tactics to install the software on users’ computers without the users’ knowledge,” he says.

The Trojan horse

Equally sneaky are “anti-spyware” e-mail promotions that offer free software downloads to rid browsers of adware. Some are, in fact, spyware programs that remove their competitors and install themselves.

With various industry factions lining up for and against adware and spyware, resolution in either direction could be a long way off. WhenU.com has challenged the Utah Spyware Control Act and in June a Utah judge ordered the state not to enforce it until the issues surrounding the law are settled.

WhenU argued that the act violates the First Amendment and dormant Commerce Clause of the United States Constitution, among other laws. “This is an important decision for the entire Internet advertising industry,” CEO Avi Naider said in a statement released after the ruling. “Spyware is a problem and we want to put an end to it. WhenU supports appropriate anti-spyware legislation at the federal level, but unfortunately Utah’s Act also impairs legitimate Internet advertising.” Naider says WhenU’s ad network doesn’t use cookies, track individual user data or clickstream data, compile a centralized database of users or engage user profiling. After the ruling, Claria also issued a statement, supporting federal legislation to end “egregious spyware practices” and regulate adware so as to “protect consumers with clear but flexible notice and consent requirements.”

Significantly, both companies separate themselves from the negatives-laden “spyware” while standing on “adware” as a legitimate business model. Settling the semantic battle and gaining consensus on the specific practices that constitute each would deflate some of the current controversy and give both sides something more specific to aim for, observers say. So would eliminating the practices associated with adware or spyware that consumers and marketers find most objectionable, whether by legislation, self-policing by ad distributors, or even technology’s efforts to plug up those browser security holes. Such measures also might have the effect of letting air out of adware’s tires as a marketing tactic, particularly those that address the issue of fully-informed consent for installation. “I don’t know a single person on the planet who is saying, give me adware; I want to see more pop-ups,” says Schwegman.

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