Messenger Ads Will Continue, For Now

A federal judge denied the Federal Trade Commission’s request for an
injunction against D Squared Solutions, a startup accused of spamming PC users with
Messenger Service “pop-up” ads promoting its spam-blocker software.

While the FTC earlier called the San Diego, Calif.-based D Squared’s actions nothing short of “extortion” — and that its messages could even cause recipient computers to crash — U.S. District Court Judge Andre Davis denied
the injunction, saying the Commission lacked sufficient evidence that the
activity injured consumers.

The case will go to trial March 8. Until then, D Squared is free
to resume sending the ads, if it so chooses. The firm had been under a
temporary injunction since early November.

D Squared, like the number of other firms distributing similar commercial
messages, relies on a little-known feature in Microsoft
Windows — the rarely-used Messenger Service, which is not to be confused
with the Redmond, Wash. software giant’s Windows XP instant messaging client
of the same name.

The service is intended to exchange “net send” and “Alerter” service
messages between computers. Those can include updates from print jobs, a
broadcast announcement by a system admin, or an alert following the
activation of an uninterruptible power supply.

For that reason, the Messenger Service (which also hinges on Remote
Procedure Call services, or RPC) has been enabled by default on Windows
operating systems since the mid-1990s, and launches automatically when a
user boots up his or her personal computer. In its default configuration,
Microsoft Windows also opens the NetBIOS TCP ports necessary to receive
messages.

However, in response to lingering privacy concerns and more recent
security worries, several major ISPs, including America Online , have said they would block the service. Microsoft owned up to
the problem in a recent critical alert and warned about the possibility of
transmitting malicious code using the service. In October, the software
giant said it would to turn off the services in Windows XP Service Pack 2,
which is due in the first half of 2004.

But in more recent weeks, the FTC has begun putting a stop to the sending
of commercial notices over Messenger Service on its own, targeting D Squared
for its policy of using the messages to advertise its software — which
actually blocks those types of ads, as well as Web-based pop-ups.

“The defendants charge consumers between $25 and $30 for their Windows
Messenger Service pop up-blocking software,” the FTC said in its lawsuit.
“In essence, defendants bombard an individual consumer with a stream of
repeated, unwanted pop up spam in an attempt to induce the consumer to pay
defendants to stop the bombardment.”

The FTC alleges that D Squared has been improperly using the
technology — since it was originally intended for administrative
messages — and that it sends ads to some users as often as once every 10
minutes to 30 minutes. The Commission also alleged that the practice causes
some computers to crash.

While Microsoft and other sources — including the FTC — post instructions on how to disable
Messenger Service, the FTC also alleges that most ordinary, non-technical PC users still don’t know how to deactivate it.

But D Squared’s attorneys argue that this is precisely why the company’s
tactics are a beneficial service for the public.

“Obviously, if Microsoft released a ‘Critical Warning,’ and there are
still people out there that haven’t disabled it, then Microsoft hasn’t been
able to reach them,” said attorney Anthony Dain last week. “So what’s the
best way to alert them? Pop it up on their screens through same channel to
which they’d be vulnerable to malicious code.”

Dain, a partner at San Diego-based Procopio, Cory, Hargreaves & Savitch,
said that while he finds pop-up ads as annoying as everyone else, “our
clients are in fact selling a pop-up blocker … I liken it to the flu
season. It’s like saying flu shots are annoying, so it’s better to leave
them in blissful ignorance. [Microsoft warns] that there are people out
there that have malicious code that could compromise systems. Instead of
addressing that, the FTC says, ‘Let’s kill the messenger.'”

He added that users could block the Messenger pop-ups by themselves with
ease.

“This annoyance is somehow equated by the FTC [to be] extortion,” he
said. “They so patronize the public and say they’re so helpless, and this
kind of message is completely beyond their ability to understand and
address. You can do it. I can do it. If you don’t like pop-ups, you can
buy our software, or just get on your computer, surf the Web for ‘pop-up
stopper,’ and you’ll find probably hundreds of different sites that will
help you to disable this system.”

Naturally, the FTC sees it otherwise, pointing to reports that the messages D Squared has been sending cause PCs to crash.

“They’ve been barraging consumers with this pop-up advertising and causing computers to freeze and work to be lost,” said FTC staff attorney Tara Flynn. “We don’t agree that they’re proving a customer service.”

Meanwhile, Dain fired back at the assertion.

“They make those statements, but they had no foundation for making those,” Dain said on Tuesday. “The judge acknowledged that computers crash all the time, and many things can cause them to crash … all they had were complaints from a few people on the extremes claming their systems froze or crashed, they had no actual evidence that the messages caused it.”

In addition to hosting a Web page giving instructions on how to disable the Messenger Service, the FTC is hoping to gather that evidence by encouraging consumers who have received D Squared’s messages and suffered crashes or lost work to contact the Commission through its Web site.

Flynn said the FTC’s site within the next day would make available a dedicated e-mail address for D Squared message recipients to contact the Commission.

Christopher Saunders is managing editor at InstantMessagingPlanet.com.

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