The move, assuming there’s an ounce of truth in it, would give Microsoft two things. First, a $100m-a-year advertising business that leverages adware installed on 40 million desktops. Second, the public relations headache from hell.
The New York Times broke the story yesterday, citing sources who had been briefed on the plans and sources close to Microsoft who possessed quite granular levels of detail about the talks, said to be in their second week.
The companies in question are not commenting for the time being.
Often, when stories such as this are leaked to the major papers, it is because negotiations have hit a sticking point, or the companies in question want to test public reaction before signing off on a deal.
Indeed, the NYT reports that there are some internal battles at Microsoft, reaching all the way to the top, over whether buying Claria, the most notorious adware company out there, would be a wise move, and that talks have stalled as a result.
But many observers think the very idea of such a deal would create yet another serious conflict of interest at Microsoft, which last December acquired anti-spyware software maker Giant Software.
Anti-spyware software is ostensibly designed to at least give its users the option of blocking or removing a wide range of potentially unwanted programs, which would include Claria’s adware.
Claria has been making moves to clean up its act in recent years, but its core business is giving advertisers the means to target internet users based on their interests, and it does this by tracking the URLs they surf to on the web.
Claria’s position is that if users are fully informed up-front what the software does and how, and they choose to use it anyway, then it cannot be called spyware.
But a study this April by Harvard researcher Ben Edelman found that Claria’s software is sometimes installed using arguably deceptive means, and that users are not given the full facts about the software before it is installed.
The company is currently seeking out partners for its BehaviorLink network, which allows other applications to run targeted ads based on Claria’s profiles database.
It’s possible that Microsoft is interested in BehaviorLink as a way to boost its MSN property’s ability to compete with Google Inc and Yahoo! Inc, both of which operate their own ad networks.
Many said that Microsoft’s acquisition of Giant and its acquisitions of anti-virus software makers presented a conflict of interest, as buggy Microsoft software is one way that such threats propagate.
But when those acquisitions were revealed, nobody could accuse the company of developing viruses or spyware. Acquiring Claria, which makes software still detected as spyware by some programs, would change that.
