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Spyware Still Cheating Merchants and Legitimate Affiliates

Spyware vendors are trying to clean up their images.  For example, Zango settled a FTC investigation, then last week sued PC Tools for detecting and removing Zango software.  Meanwhile, Integrated Search Technologies …

Ben Edelman

Context & Ripple Effects

The spyware economy Edelman has been documenting entered a new phase by mid-2007. Industry-wide anti-spyware guidelines were finalized in January 2006, and by that summer reporting showed adware developers netting huge profits amid public outrage — the money never stopped flowing even as the label 'spyware' became toxic.

What changed this week is the legal posture: Zango, having settled an FTC investigation into its practices, turned around and sued PC Tools for detecting and removing Zango software, while Integrated Search Technologies continues operating. A firm that settled with the regulator is now attacking the security tools users rely on — a reputational-laundering strategy Edelman argues still cheats merchants and legitimate affiliates.

First-order effects

  • PC Tools faces a lawsuit whose practical effect is to raise the cost of flagging adware, pressuring it and rival anti-spyware vendors over whether to keep detecting Zango at default sensitivity.
  • Merchants running affiliate programs remain exposed: commissions routed through adware-installed machines pay for traffic the merchant believes is organic, a loss Edelman ties directly to Zango and Integrated Search Technologies' distribution.

Second-order effects

  • Other adware distributors gain a template — settle with the FTC, then litigate against detection — which shifts the battleground from engineering evasion to chilling security vendors' classification decisions.
  • Advertisers and affiliate networks face pressure to audit where their placements actually render, since the rumored use of teenagers and unwitting users to spread Zango adware across MySpace (unconfirmed, per reports at the time) shows distribution outrunning any written guidelines.

Third-order effects

  • If settlement-plus-litigation becomes the standard playbook, the industry splits between firms that buy procedural legitimacy and the security community, with the FTC's case-by-case settlements functioning as a license rather than a deterrent.
  • The durable question is who defines 'unwanted software' — the vendor's EULA, the anti-spyware vendor's heuristics, or the regulator — and 2007's fights suggest courts, not guidelines, will decide.

The trend: Adware firms are shifting from technical evasion to legal offensives against the security products that detect them, using regulatory settlements as cover for legitimacy.