Yahoo Funding Spyware?

UPDATED: An independent spyware analyst is accusing Yahoo of supporting spyware companies by distributing Yahoo Search Marketing ads to them.

Consultant Ben Edelman faulted Yahoo for not letting its advertisers know where their ads might end up.

“We know people pay very high pay-per-click fees when they think they’re getting traffic from Yahoo, because advertisers think Yahoo users are more valuable,” Edelman told internetnews.com. “Whatever their value actually is, advertisers who are buying the stuff should be told what they’re getting.”

Adware is free ad-supported software that users can download at no charge. But in his blog, Edelman documented how the software is installed without clear notification.

Edelman claims three bad actors distribute Yahoo Search Marketing ads: Claria, eXact and DirectRevenue.

Edelman said that users may unwittingly install Claria’s tool, which delivers pop-up and pop-under ads targeted to users’ search activities. He documented dozens of instances of software from eXact Advertising installed through security holes, with no notice or consent; eXact displays a sidebar to search results displaying targeted ads. DirectRevenue’s Searchblazer delivers pop-up ads based on users’ search queries.

According to Edelman, DirectRevenue has the worst practices. It may use misleading pop-ups to get users to install it, and it’s unusually difficult to remove. Worse, he said, it can disable and delete other software on a user’s PC.

Yahoo should inform advertisers that their messages may end up displayed in adware applications that don’t use proper business practices, Edelman said. He noted that Google also distributes PPC ads to adware companies.

“If Yahoo’s advertisers were fairly advised of Yahoo’s plan to syndicate their ads to spyware programs, Yahoo might claim to be acting solely as their agent; perhaps advertisers want to buy advertising from Claria, eXact, [DirectRevenue], and other such vendors. But in fact Yahoo fails to tell advertisers what will occur — so Yahoo’s syndication of advertisers’ ads cannot be claimed to occur with advertisers’ authorization,” he wrote.

Yahoo did not respond to a request for comment; eXact responded with an e-mail explaining how to uninstall its software that included a telephone number for further support. Richard Mass, chief privacy counsel for exact, said that his company gives users clear notice of the software they are downloading and obtains their explicit consent. The company provides strict guidelines to distribution partners, and has discontinued relationships with questionable affiliates, including the ones Edelman identified. It also asked the International Association of Privacy Professionals to review its practices and enhanced them in response to the audit.

Scott Eagle, Claria’s chief marketing officer, said that while Edelman considers all adware spyware, his company in fact does more than the industry standard to inform users of what they’re getting.

In response to complaints from Edelman and others over the years, Claria maintains a toll-free telephone number to help users and has also continually improved transparency for users.

For Claria, the spyware brand is a scarlet letter that it can’t shrug off. Last week, the company announced a strategy to “evolve beyond the adware category.” Instead of distributing pop-up and pop-under behaviorally targeted ads, Claria will focus on PersonalWeb, a desktop tool that automatically feeds content and advertising based on online behavior. Eagle said the tool, which is scheduled to launch in the fourth quarter, is very similar to Google Sidebar.

As part of the reorganization, Mitchell Weisman left the company. As a senior vice president, the company said, he was responsible for the highly criticized distribution deal with Kazaa. Edelman charged that peer-to-peer network Kazaa piggybacked downloads of Claria’s adware and many other applications without adequate notice to users.

While Eagle disagreed with Edelman’s criticism of Yahoo he did say: “I agree that anyone who distributes software needs to be able to control the user experience. We stopped distributing with affiliates over four years ago for exactly the reasons he mentions.”

Corrects prior version by attributing comments to eXact and to clarify Claria’s comments about its products.