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Specific companies

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The Spyware – Click-Fraud Connection — and Yahoo’s Role Revisited

In August I reported a startling number of notorious spyware programs receiving payments, directly or indirectly, from Yahoo!’s pay-per-click (PPC) (Overture) search system. Yahoo pays numerous other companies to show these ads via syndication relationships. So when a spyware vendor can’t find advertisers to buy its ad inventory directly, the spyware vendor can show Yahoo ads instead. Every time a user clicks on such an ad, the advertiser must pay Yahoo. Then Yahoo pays a revenue share to the spyware vendor that showed the ad. My August article documented relationships between Yahoo and 180solutions, Claria, Direct Revenue, eXact Advertising, IBIS, and SideFind.

My August article covered “just a few of the … examples I have observed and recorded.” Since then, my Yahoo-spyware collection has grown dramatically. I now have many dozens of different examples of Yahoo pay-per-click ads shown within spyware.

My August examples demonstrate what I call “syndication fraud” — Yahoo placing advertisers’ ads into spyware programs, and charging advertisers for resulting clicks. But Yahoo’s spyware problems extend beyond improper syndication. In my August syndication fraud examples, an advertiser only pays Yahoo if a user clicks the advertiser’s ad. Not so for three of today’s examples. Here, spyware completely fakes a click — causing Yahoo to charge an advertiser a “pay-per-click” fee, even though no user actually clicked on any pay-per-click link. This is “click fraud.”

This document offer four fully-documented examples of improper ad displays (1, 2, 3, 4), including three separate examples showing click fraud. I then develop a taxonomy of the problem and suggest strategies for improvement.

The Pay-Per-Click Promise; The Click Fraud Threat

When advertisers buy pay-per-click advertising, they largely expect and intend to buy search engine advertising. If a user goes to Yahoo and types a search term, interested advertisers want their ads to be shown. Ads are supposed to be carefully targeted, i.e. to the specific keywords advertisers specify. And an advertiser is only supposed to pay Yahoo when a user actually clicks the advertiser’s ad.

Click fraud attacks these promises. In canonical click fraud, one advertiser repeatedly clicks a competitor’s ads — or hires others to do so, or builds a robot to do so. Deplete a competitor’s budget, and he’ll leave the advertisement auction. Then the first advertiser can win the advertising auction with a lower bid.

Advertisement syndication also creates a risk of click fraud. Suppose Yahoo contracts with some site X to show Yahoo’s ads. If a user clicks a Yahoo ad at X, Yahoo commits to pay X (say) half the advertiser’s payment to Yahoo. Then X has an incentive to click the Yahoo ads on its site — or to hire others to do so, or to build robots to do so.

Spyware syndication falls within the general problem of syndication-based click fraud. Suppose X, the Yahoo partner site, hires a spyware vendor to send users to its site and to make it appear as if those users clicked X’s Yahoo ads. Then advertisers will pay Yahoo, and Yahoo will pay X, even though users never actually clicked the ads.

The following three examples show specific instances of spyware-syndicated PPC click fraud. In each example, I present video, screenshot, and packet log proof of how spyware vendors and advertisement syndicators defraud Yahoo’s advertisers.

Click Fraud by 180solutions, Nbcsearch, and eXact Advertising – December 17, 2005

PPC advertisers
money viewers
Yahoo Overture
money viewers
eXactSearch
money viewers
Nbcsearch
money viewers
180solutions

The money trail – how funds flow from advertisers to Yahoo Overture to 180solutions

On a test PC with 180solutions (among other unwanted software) (widely installed without consent), I browsed Nashbar.com, a popular bicycling retailer. I received a popup that immediately forwarded traffic to a Yahoo Overture PPC link — faking a click on that link, and charging an advertiser as if a user had clicked on that link, even though I had not actually done so.

Reviewing my packet log, I see that traffic flowed as listed below.

http://tv.180solutions.com/showme.aspx?keyword=bicycle%2aparts+cycling+cycling…
http://popsearch.nbcsearch.com/metricsdomains.php?search=mountain+bike
http://ww3.exactsearch.net/red.php?mc=T%2FcbeGxGNus4%2F3AyiyVWsqV5cRprOptbkiRR…
http://ww3.exactsearch.net/click.php?mc=T%2FcbeGxGNus4%2F3AyiyVWsqV5cRprOptbki…
http://207.97.227.18/clk/?31303b313133343836343333352e39347e74696572313b3030
http://www22.overture.com/d/sr/?xargs=15KPjg149StpXyl%5FruNLbXU7Demw1X18j2tJ5w…
http://clickserve.cc-dt.com/link/click?lid=43000000005485843
http://www.sportsmansguide.com/affiliate/ccx.asp?url=http%3A%2F%2Fshop%2Esport…

See also full packet log, annotated screenshots, and video.

As shown in the diagram at right, the net effect of these practices is that advertisers pay Yahoo, then Yahoo pays eXact Advertising (eXactSearch), which pays Nbcsearch, which pays 180solutions.

All these payments are predicated on a user purportedly clicking an ad — but in fact no such click ever occurred. Because advertisers are charged for pay-per-click “clicks” without any such click actually taking place, this is an example of click fraud.

Click Fraud by 180solutions, Nbcsearch, and Ditto.com – March 2, 2006

PPC advertisers (i.e. SmartBargains)
money viewers
Yahoo Overture
money viewers
Ditto.com
money viewers
Nbcsearch
money viewers
180solutions

The money trail – how funds flow from advertisers to Yahoo Overture to 180solutions

On a test PC with 180solutions (among other unwanted software) (widely installed without consent), I browsed SmartBargains.com, a popular discount retailer. I received a popup that, in its title bar, indicated that it came from 180solutions. Mere seconds later, I was redirected to a duplicate window of SmartBargains.

Reviewing my packet log, I see that traffic flowed as listed below.

http://tv.180solutions.com/showme.aspx?keyword=%2esmartbargains%2ecom+smart+…
http://popsearch.nbcsearch.com/metricsdomains.php?search=smartbargains.com
http://ww2.ditto.com/red.php?mc=T%2FgSdHBNM%2Bg2%2B3AyiyVWsqV5cRprOptbkiRRrZ…
http://ww2.ditto.com/click.php?mc=T%2FgSdHBNM%2Bg2%2B3AyiyVWsqV5cRprOptbkiRR…
http://agentq.ditto.com/click.clk?pid=708811&ss=smartbargains.com&advname=sm…
http://www24.overture.com/d/sr/?xargs=15KPjg1%2DpSgJXyl%5FruNLbXU6TFhUBPycz2…
http://www.smartbargains.com/default.aspx?aid=47&tid=82136

See also full packet log, annotated screenshots, and video.

As shown in the diagram at right, the net effect of these practices is that advertisers pay Yahoo, then Yahoo pays Ditto.com, which pays Nbcsearch, which pays 180solutions.

All these payments are predicated on a user purportedly clicking an ad — but in fact no such click ever occurred. Because advertisers are charged for pay-per-click “clicks” without any such click actually taking place, this is an example of click fraud.

This example also shows what I call “self-targeted traffic.” Notice that the net effect of this click fraud is to show the user the site the user had requested — but to show that site also in a second (“double”) window. Since users end up at the requested site, users may not notice that anything is wrong. But from an advertiser’s perspective, something is very wrong: This process asks SmartBargains to pay Yahoo Overture PPC fees for SmartBargains’ own organic traffic — a lousy deal, since Yahoo Overture is providing SmartBargains with no new leads and no genuine value.

Click Fraud by Look2me/Ad-w-a-r-e, Improvingyourlooks.com, and Two Unknown Parties – April 1, 2006

PPC advertisers (e.g. lasikcookeye.com)
money viewers
Yahoo Overture
money viewers
64.14.206.59
money viewers
improvingyourlooks.com
money viewers
12.129.178.27
money viewers
Look2me / Ad-w-a-r-e

The money trail – how funds flow from advertisers to Yahoo Overture to Look2me / Ad-w-a-r-e

On a test PC with Look2me/Ad-w-a-r-e (among other unwanted software) (installed without my consent), I received a popup that redirected me to and through a Yahoo Overture PPC link. The popup ultimately showed me the lasikcookeye.com site even though I had showed no prior interest in eye problems or eye surgery. Reviewing my packet log, I see that traffic flowed as listed below:

http://www.ad-w-a-r-e.com/cgi-bin/UMonitorV2
http://64.194.221.33/cgi-bin/KeywordV2?query=4047&ID={…}
http://12.129.178.27/redir?aid=1006&cid=162&xargs=ZmlkPTUxJmtleT1sYX…
http://search.improvingyourlooks.com/index.html?red=1&q=lasik%20eye%20su…
http://search.improvingyourlooks.com/?1143930576
http://64.14.206.59/cgi-bin/feedred?c=2188&p=2068&q=lasik%20eye%20surgery&de…
http://www10.overture.com/d/sr/?xargs=15KPjg17hS%2DZXyl%5FruNLbXU6TFhUBQxd7t…
http://www.lasikcookeye.com/

See also full packet log, annotated screenshots, and video.

As shown in the diagram at right, the net effect of these practices is that advertisers pay Yahoo, then Yahoo pays the operators of the server at 64.14.206.59, which pays improvingyourlooks.com, which pays 12.129.178.27, which pays Ad-w-a-r-e.

All these payments are predicated on a user purportedly clicking an ad — except that in fact no such click ever occurred. Because advertisers are charged for pay-per-click “clicks” without any such click actually taking place, this is an example of click fraud. Furthermore, because my prior activity gave no sign of any interest in eye care, this popup sends the advertiser untargeted traffic — also contrary to Yahoo’s representations to advertisers.

Advertiser Lasikcookeye is the victim of these practices and the victim of this click fraud. Lasikcookeye contracted with Yahoo to buy pay-per-click ads shown at Yahoo.com when users performed relevant searches. Lasikcookeye intended (and reasonably expected) that its ad would be shown to appropriate users, and that it would only be charged if a user saw the ad, found it appealing, and specifically chose to click on it. Instead, Lasikcookeye here was charged for a “click” that never took place, and for its site being shown to a user who never asked to see it. Furthermore, Lasikcookeye’s site was shown in a popup, an advertising format users are known to dislike, which risks damaging Lasikcookeye’s good name.

Unlabeled PPC Links Inserted into Third Party Web Sites – by Qklinkserver.com / Srch-results.com, Searchdistribution.net, and Intermix’s Sirsearch – April 2, 2006

The circled link was inserted into the nytimes.com site by Qlinkserver. Clicking the link sends traffic to Yahoo Overture PPC and on to an advertiser. The circled link was inserted into the nytimes.com site by Qklinkserver, without the Times’ consent. Clicking the link sends traffic to Yahoo Overture PPC and on to an advertiser.

PPC advertisers (e.g. shop.com)
money viewers
Yahoo Overture
money viewers
Intermix Sirsearch
money viewers
Searchdistribution.net
money viewers
Qklinkserver.com / Srch-results.com

The money trail – how funds flow from advertisers to Yahoo Overture to Qklinkserver

On a test PC with Qklinkserver (among other unwanted software) (installed without my consent), I observed numerous extraneous hyperlinks inserted into third parties’ sites. Checking these same sites on ordinary uninfected PCs, I received no such links. See e.g. the partial screenshot at right, showing an extra hyperlink inserted into the lead article listed on the New York Times site.

Clicking that extra New York Times link yielded traffic to a Yahoo Overture PPC link and on to a Yahoo Overture advertiser (here, shop.com). Reviewing my packet log, I see that traffic flowed as listed below:

http://www.qklinkserver.com/lm/rtl4.asp?si=20057&k=prime%20minister
http://search1.srch-results.com/search.asp
http://partnernet.searchdistribution.net/go3.aspx?encr=1&nv_click=9JT5m1b…
http://www.sirsearch.com/click.cfm?rurl=http%3a%2f%2fwww10.overture.com%2…
http://www10.overture.com/d/sr/?xargs=15KPjg1%5F5SjJXyl%5FruNLbXU6TFhUBPz…
http://www.shop.com/op/aprod-~Prime+Minister+Print?ost=prime+minister&sou…

See also full packet log, annotated screenshots, and video.

As shown in the diagram at right, the net effect of these practices is that advertisers pay Yahoo, then Yahoo pays Intermix (Sirsearch), then Intermix pays Searchdistribution.net which pays Qklinkserver.com / Srch-results.com.

As shown in the inset image above-right, Qklinkserver.com inserts links into other sites without any on-screen indication that the links come from Qklinkserver, not from the requested sites. Users seeing such links might reasonably think they reflect editorial selection by the requested sites (i.e. New York Times editors picking an appropriate link), when in fact the links merely point to whichever advertisers bid highest at Yahoo.

Note that traffic passes through Intermix’s Sirsearch servers. This is not Intermix’s first involvement with spyware, nor Intermix’s first involvement with Yahoo in the context of spyware. During the New York Attorney General’s summer 2005 investigation of Intermix for improper installation of advertising software onto users’ computers, a NYAG investigator reported that more than 10% of Intermix’s revenues came from Yahoo. The investigator further commented that the NYAG was “not ruling out … going after … Overture” for its role in funding Intermix. My findings here suggest that Intermix’s relationship with Yahoo and Intermix’s funding of spyware may extend beyond what was previously known.

I have tested the Qklinkserver advertising software at length. Of the links I have received from Qklinkserver, every single one ultimately passes through Yahoo Overture. As best I can tell, Yahoo Overture is the sole source of funding for Qklinkserver. (Compare: Yahoo Overture funding 31% of Claria, per Claria’s 2003 SEC S1.)

Understanding the Problem

I see six distinct problems with the Yahoo practices and partners at issue.

  • Click fraud. Through these improper ad displays, Yahoo charges advertisers for “clicks” that didn’t actually occur. This violates the core premise of pay-per-click advertising, i.e. that an advertiser only pays if a user affirmatively shows interest in the advertiser’s ad. Yahoo promises: “Pay only when a customer clicks on your listing.” But that’s just not true here. Instead, through click fraud, advertisers are asked to pay for spyware-delivered traffic, whether or not users actually click.
  • Untargeted traffic. Premium prices for PPC advertising reflect, in part, the extreme targeting of PPC leads: PPC ads are only supposed to be shown to users actively searching for the specified product, service, or term. Yahoo promises: “Advertise only to customers who are already interested in your products or services.” That’s also untrue in some of my examples. in fact spyware-delivered PPC results show Yahoo PPC ads to users with no interest in advertisers’ products or services.
  • Self-targeting traffic. Spyware-delivered PPC ads often target advertisers with their own ads. For example, in August I reported a user browsing the Dell site, then receiving spyware-delivered Yahoo PPC advertising promising “up to 1/3 off” if a user clicked a prominent link. But clicking that link didn’t actually provide any discounts or savings beyond Dell’s usual prices. However, each time a user clicked the link, Dell had to pay Yahoo a PPC advertising fee that I estimate at $3.30. That’s a bad deal for Dell: These users were already at Dell’s site, and there’s no reason why Dell should pay Yahoo or a spyware vendor just to keep them there. Same for self-targeting of SmartBargains, reported above.
  • Failure to label sponsored links as such. Through spyware syndication, Yahoo PPC ads often appear on users’ screens without appropriate labeling. When unlabeled ads appear in or adjacent to search engine results, these ads risk violating the FTC‘s 2002 instructions for advertising disclosures at search engines. See my prior SideFind example, where SideFind justifies bona fide search results with Yahoo PPC ads, without labeling Yahoo’s ads as such. Unlabeled ads also prevent users from understanding the nature of the linked content: For example, recall my Qklinkserver example. Seeing unlabeled text links inserted into ordinary web pages, users reasonably expect that such links were chosen by the sites users were visiting, when in fact such links were unilaterally inserted by unrelated spyware installed without user consent.
  • Low-quality traffic. Advertisers pay Yahoo a premium to reach desirable users at Yahoo.com — sophisticated users, users who are actively engaged in search. In contrast, spyware sends advertisers low-quality users, including users who are less likely to make a purchase. This traffic is not worth the premium price Yahoo charges. Consider: 180solutions sells popups for as little as $0.015 (one and a half cents) per ad display. In contrast, Yahoo charges a minimum of $0.10 — more than six times as much. Yahoo harms advertisers when Yahoo charges advertisers its premium prices for ads ultimately shown through low-quality low-cost channels like 180solutions.
  • Unethical spyware-sourced traffic. Industry norms, litigation, and instructions from policy makers (1, 2) all tell advertisers to keep their ads out of spyware. Discomfort with spyware reflects concerns about installation methods (misleading and nonconsensual installations), privacy effects, other harms to consumers, and harms to other web sites. For these and other reasons, many advertisers make a serious good-faith effort to stay away from spyware. These same advertisers also buy PPC ads from Yahoo — a standard, reasonable practice for anyone buying online advertising. Unfortunately, these Yahoo PPC ad purchases inevitably and automatically put advertisers into notorious spyware, including the programs reported above. By allowing these improper ad placements, Yahoo endangers its advertisers’ good names, and risks putting them in violation of best practices and policy-makers’ guidance.

Each of these problems is serious in its own right. But the examples at hand, in my current and prior reporting, inevitably combine several such problems — making them particularly troubling. The table below attempts to summarize my findings, as to the specific examples reported above and previously.

Click Fraud Untargeted traffic Self-targeting traffic Failure to label sponsored links as such Low-quality traffic Unethical spyware-sourced traffic Software sometimes installed without any user consent
180solutions / Nbcsearch / eXact (December 2005) x n/a* x x x
180solutions / Nbcsearch / Ditto (March 2006) x x n/a* x x x
Look2me / Ad-w-a-r-e / Improvingyourlooks (April 2006) x x n/a* x x x
Qklinkserver / Srch-results / Searchdistribution / Intermix SirSearch (April 2006) x x x x
Claria (August 2005) x x x
eXact Advertising (August 2005) x x x x
Direct Revenue / InfoSpace (August 2005) x x x x x
180solutions / InfoSpace (September 2005) x x x
IBIS / InfoSpace (June 2005) x x x
SurfSideKick / TrafficEngine (September 2005) x x x x x
Hotbar (November 2005) x x x x x

* – These examples entail click fraud — with nothing shown to a user before a PPC ad was invoked, and hence no opportunity for improper ad labeling.

An empty box should not be taken to be an endorsement of a vendor’s practices, or an indication that that vendor does not perform the specified practice. For example, although I have not chosen to post an example of eXact Advertising harming merchants via self-targeting, I have observed such self-targeting.

Yahoo’s Click Fraud and Syndication Fraud in Context

Many others have alleged click fraud at Yahoo. (1, 2, 3) But others generally infer click fraud based on otherwise-inexplicable entries in their web server log files — traffic clearly coming from competitors, from countries where advertisers do no business, or from particular users in excessive volume (i.e. many clicks from a single user). In contrast, my proof of click fraud is direct: As documented and linked above, I have captured click fraud on video and in packet logs. Yahoo may argue about advertisers’ inferences in other instances, i.e. disputing that advertisers have really found click fraud. But it’s far harder to deny the click fraud shown in my examples.

In the examples I show above and previously, Yahoo’s problem results from bad partners within its network. Yahoo syndicates ads to numerous partners, many of whom syndicate ads to others, some of whom then syndicate ads still further. The net effect is that Yahoo does not know who it’s dealing with, and therefore cannot exercise meaningful supervision over how its ads are displayed. I consider this a bad idea — bad business, bad for quality, bad for accountability. But Yahoo need not listen to me. Instead, consider instructions from New York Attorney General staff member Ken Dreifach: “Advertisers and marketers must be wary of fraud or deceptive practices committed by their affiliates, even [affiliates] that they have no working relationships with.” (Quote from MediaPost, summarizing Dreifach’s remarks.)

Yahoo’s “Whack-A-Mole” Problem

The many bad partners in Yahoo’s network make fraud particularly hard to block: When Yahoo terminates one fraudster, that fraudster’s partners find another way to continue operations.

Notice that the first and second examples (above) both show click fraud that originates with 180solutions and Nbcsearch. Yet Nbcsearch’s relationship with Yahoo Overture differs between these two examples: In the first, Nbcsearch gets ads from eXactSearch which gets ads from Yahoo; in the second, Nbcsearch instead gets Yahoo ads from Ditto.com. My testing suggests that Yahoo may have terminated the former ad channel at some point after my December testing. But Nbcsearch’s efforts to defraud Yahoo advertisers were not stymied by Yahoo’s possible termination of the first channel; Nbcsearch was able to find a new channel, i.e. Ditto.com, by which to continue to perform click fraud.

Yahoo’s enforcement difficulties are also borne out in its unsuccessful attempts to sever ties with 180solutions and Direct Revenue. After I highlighted these vendors in my August report, it seems Yahoo attempted to terminate its relationships with them. Yet 180 continued not just to show Yahoo ads, but also to perform click fraud, as documented in the first two examples above. Furthermore, as recently as February 2006, I have continued to see Direct Revenue serving popups that ultimately show Yahoo PPC ads. So even when Yahoo seeks to sever relationships with a partner as well-known as 180solutions or Direct Revenue, it seems Yahoo is unable to do so.

What Comes Next

After my August report, Yahoo terminated several of the specific wrongdoers I identified. I expect and hope that Yahoo will respond similarly to the findings reported here. If I learn of such a response, or if I receive any other relevant communication from Yahoo, I will update this page accordingly.

But it is not a sustainable approach for me to perform occasional public audits for Yahoo. These reports are infrequent, hardly sufficient to protect advertisers from ongoing fraud. Furthermore, these reports are merely illustrative — giving a few examples of a broad class of problems, but reporting only a small proportion of the fraud of which I am aware.

Yahoo recently announced its support (as a founding sponsor) of TRUSTe‘s forthcoming Trusted Download Program. The Trusted Download program intends to certify advertising software — so advertisers can confidently buy ads from such programs. I have a variety of concerns about the program — including that its standards may be too lax, that it will face exceptional difficulties in performing meaningful enforcement, and that I don’t know that any “adware” deserves a certification or endorsement. But even if Trusted Download were fully operational and working as expected, it would not have identified or prevented the problems described in this article. At best, Trusted Download would tell Yahoo that it may work with whatever adware vendors earn TRUSTe’s certification. But Yahoo’s problem isn’t uncertainty about which adware vendors are good. Instead, Yahoo’s problem is that, time and time again, it finds itself working with (and its advertisers defrauded by) notorious “adware” vendors — vendors Yahoo has already resolved to avoid (e.g. 180solutions, Direct Revenue), or vendors that wouldn’t come close to passing any ethics test (e.g. Qklinkserver, Look2me/Ad-w-a-r-e). Trusted Download doesn’t and won’t monitor advertisement syndication; Trusted Download won’t and can’t prevent these bad Yahoo PPC syndication relationships.

I see two basic strategies for Yahoo. Yahoo could try to limit its exposure to fraud, i.e. by scaling back its partner network, by more thoroughly vetting its partners, and by prohibiting its partners from further resyndicating Yahoo’s ads. Alternatively, Yahoo could try to detect fraud more thoroughly and more quickly, i.e. by implementing aggressive and robust testing methods to find more examples like those above, and like the dozens more examples I have on file. I tend to think both strategies are appropriate; in combination, they might serve to blunt this growing problem. But merely ignoring the issue is not a reasonable option; Yahoo’s advertisers pay top dollar for Yahoo PPC ads, and they deserve better.

Yahoo cannot expect these fraudulent techniques to disappear. Yahoo is an attractive target for fraudsters due to Yahoo’s high advertising charges and Yahoo’s high payments to partners. As spyware vendors find other revenue sources increasingly difficult (i.e. because advertisers do not want to buy spyware-delivered advertising), spyware vendors are likely to continue to turn to more complex advertising channels such as PPC, which are more amenable to fraud due to their reduced transparency and increased complexity. Yahoo, like other PPC services, needs to anticipate and block this growing problem.

Similar issues confront Google — though, in my testing, more often through bad syndication and less often through click fraud. I’ll cover Google’s problems in a future piece. Meanwhile, see my prior articles about Google and spyware: 1, 2.

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Pushing Spyware through Search

This article uses data from SiteAdvisor, a company to which I serve as an advisor.

Much of the computer security industry acts like spyware is immaculately conceived. Somehow it just appears on computers, we are led to believe, and supposedly all we can do is clean up the mess after it happens, rather than prevent it in the first place. I disagree.

Now, we all love Google. I use Google’s search site all day every day, and I enjoy their downloadable applications too. So I have the greatest respect for Google’s core service. But there’s another side to their business. Indirectly, Google and other search engines make big money from spyware, through paid search advertising that infects users who don’t know any better or don’t understand what they’re getting into.

Consider a Google search for “screensavers”:

Risky Entries in 'Screensavers' Search Results

The colored icons next to search results were inserted not by Google, but by the SiteAdvisor client application, based on the results of SiteAdvisor’s automated tests for each listed site. Six of Google’s ten sponsored links get “red” or “yellow” ratings — generally indicating unwanted advertising through spyware or, in some instances, high-volume commercial email. But without SiteAdvisor (or some similar protection), users would have no idea which sites were safe; they’d be at great risk of clicking through to an unsafe site, ultimately risking installation of unwanted software.

Screensaver Advertisers’ Business Model

Google surrounds its “screensavers” search results with ten ads selected from interested Google advertisers. Whenever I see a company buying an ad (online or offline) for a “free” product, I ask myself: How do they make money? With few exceptions, companies only buy online advertising when they expect to get something directly in return. (There are exceptions — dot-com bubble “eyeball” purchases, Fortune 500 “brand building,” perhaps some free ads offered by the Google Foundation.) But in the case of these screensaver providers, they’re almost certainly making money somehow if they can afford to pay Google’s high pay-per-click prices.

So how do Google’s screensaver advertisers make money? Most of Google’s screensaver advertisers really do offer screensavers that are “free” in the sense that users need not provide a credit card number. But they’re not free in the sense of being available without substantial adverse effects. Quite the contrary: Users must put up with various forms of intrusive advertising.

Let’s look at funscreenz.com, a top-ten Google advertiser for “screensavers.”

"Funscreenz installation page

Funscreenz.com is owned by BestOffersNetwork, which is another name for notorious “adware” company Direct Revenue. Recall Direct Revenue’s Newsweek profile – plenty of users (and multiple lawsuits) alleging that their software installs improperly and, in many cases, without consent. I’ve previously documented Direct Revenue installed in tricky popups, via false claims of purportedly-required add-ons, and through exploits without any consent at all.

Of course Funscreenz is not alone. Also in top “screensavers” Google results are ads for Claria, Ask Jeeves, and various adware bundlers (who distribute changing or multiple advertising programs). One top Google “screensaver” advertiser sends 15+ emails per week to those who provide an email address to get a screensaver. Results at Yahoo and MSN are similar.

Estimating Search Engine Revenues from Spyware Infections

Every time a user clicks through a search engine ad, the search engine gets paid. Google doesn’t ordinarily say how much advertisers pay. But Yahoo (which does) charges about $0.25 for a “screensavers” click. Let’s do some math. Of the users who click through to screensavers.com, suppose 10% actually download a screensaver – a conversion rate most web sites would celebrate. Then screensavers.com needs to earn $2.50 per download ($0.25/10%) just to break even. That’s a lot of money per download. But they’re buying the ads anyway, and they’re savvy decision-makers. So we can deduce that this site grosses at least $2.50 per download.

How much money do search engines make from these ads? Some initial back-of-the-envelope estimates: According to Yahoo’s keyword inventory tool, “screensaver” (and its hundred most common variants) received about 2.3 million searches in December 2005. Suppose 20% of those searchers clicked on paid links. (That’s conservative, since ads fill more than half of typical users’ screens.) As estimated above, suppose Yahoo collects $0.25 per paid click. Then Yahoo made about $115,000 in December 2005 from “screensaver” and variants. Throw in Google, with its bigger market share, and “screensaver” likely yields about $250,000 of revenue per month.

Of course, not all “screensaver” ads ultimately yield spyware. But from SiteAdvisor’s tests, it seems at least 60% push spyware, spam, or similar unwanted materials. So Google and Yahoo’s “dirty” revenue, from dubious screensavers ads, is probably about $150,000 per month.

But “screensaver” is only one of many terms that commonly leads to spyware and adware. I’ll look at other risky keywords in future articles, as I try to measure the prevalence of this problem in greater detail. Reviewing traffic data from Yahoo’s inventory tool, I’m confident that similarly-affected keywords total at least fifteen times the traffic to “screensavers.” Then Google and Yahoo make about $2.2 million per month, or $26 million per year, through this spyware-pushing advertising. That may not be big money to them, but to my eye it’s a lot.

Clearly there are quite a few estimates here. Send email for methodological improvements and alternative data sources.

Closing Thoughts

As with so many great Internet inventions, the bad guys have stormed the gates of search engines. Now is the time to start fighting back. That doesn’t mean search engines should blacklist every company I ever criticize, but some “adware” vendors are so shady that search engines could proudly refuse their money. Responsibility starts at home. More on search engines’ possible strategies in a future article.

Past work on search engines funding spyware: Yahoo ads syndicated into spyware, Google ads shown through spyware-delivered popups and other vendors’ improperly-installed toolbars.

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How Yahoo Funds Spyware updated September 5, 2005

Yahoo’s Overture (recently renamed Yahoo Search Marketing) allocates pay-per-click (PPC) ads among Yahoo’s network of advertisers. When users run searches at yahoo.com, Yahoo’s advertisers are assigned placements at the top, right, and bottom of search results. Advertisers pay Yahoo a fee when users click on their ads.

But Yahoo doesn’t just show advertisers’ ads on yahoo.com; Yahoo also distributes advertisers’ ads to Yahoo’s various syndication partners. Many of these partners are entirely legitimate: For example, most advertisers will be happy to show their ads to users running searches at washingtonpost.com, where Yahoo sponsored links complement searches of Post articles.

However, serious concerns arise where Yahoo syndicates advertisers’ ads to be shown by advertising software installed on users’ PCs — software typically known as spyware or adware. In my testing, Yahoo’s funding of spyware is widespread and prevalent — an important source of revenue for many spyware programs installed on millions of users’ PCs. Were it not for Yahoo’s funding of these programs, the programs would be far less profitable — and there would be fewer such programs trying to sneak onto users’ PCs.

Yahoo’s funding of spyware is not unique. I’ve recently written about Google’s funding of similar bad actors (1, 2). Earlier this year, FindWhat disclosed related problems, admitting that terminating its dubious distributors would reduce revenues by at least 5%. But in my hands-on testing of various spyware-infected PCs, I find that I receive Yahoo-syndicated ads more frequently than I receive such ads from any other single PPC network.

This article proceeds in three parts. First, I show examples of Yahoo ads supporting Claria, eXact Advertising, Direct Revenue, 180solutions, and various others; I also review the objectionable practices of each of these vendors. (Numerous additional examples on file.) Second, I review Yahoo’s disclosures to advertisers — finding that Yahoo has failed to tell advertisers about its controversial syndication partners, even in general terms. I conclude with recommendations to Yahoo (and other PPC search engines that allow syndication), as to how to put an end to this mess and avoid such problems in the future.

Claria (Gator / GAIN): SearchScout Popunders of Yahoo Sponsored Links

A Yahoo Overture popunder, delivered by Claria, targeting a Google search for the same phrase. Shown after activating the popunder. A Yahoo Overture popunder, delivered by Claria, targeting a Google search for the same phrase. Shown after activating the popunder.

A Yahoo Overture popunder, delivered by Claria, showing sponsored results for A Yahoo Overture popunder, delivered by Claria, showing sponsored results for “computer” when users visit Dell.com. Shown after activating the popunder and right-clicking the ad to show its destination.

    PPC advertisers (i.e. Dell)    
money viewers
Yahoo Overture
money viewers
Claria (Gator / GAIN)

The money trail – how funds flow from advertisers to Yahoo Overture to Claria.

Likely Yahoo’s largest single advertising software syndicator, Claria shows Yahoo Overture pay-per-click ads in popunders triggered by users’ web browsing.

Before showing Yahoo ads, Claria software must first become installed on users’ computers. Claria’s installation often proceeds without meaningful user consent. For example, Claria often gets installed through software bundles — where a user seeks one program but gets Claria too. Historically, Claria’s bundles have featured lengthy license agreements (as long as 5,900+ words and 63 on-screen pages), broken license formatting (missing line breaks, making section headings hard to find), and substantively unreasonable terms (including restrictions on how users can remove Claria software). Claria also promotes its software through banner ads — including ads on kids sites, claiming to fix computer clocks or improve computer security, showing a license only after installation has begun and cannot be cancelled. Some Claria uninstallers don’t work — leading users in circles rather than actually removing Claria software.

Claria’s core business is showing pop-up ads specifically purchased by advertisers. (See my 2003 listings, including well-known advertisers. See also PC Pitstop listing based on Claria 2003 disclosures.) But Claria also shows popunders of Yahoo Overture sponsored links. Search for “computer repair” at any major search engine, and Claria adds a popunder giving Yahoo Overture ads for that same term. Sponsored link popunders also target specific web sites. Visiting Dell often yields a Claria popunder of Yahoo Overture ads for “computer.”

Claria’s provision of Yahoo Overture sponsored links raises clear questions of business benefit for affected advertisers. In the second screenshot at right, the user was already at the Dell.com site. (Indeed, Dell might have just paid several dollars to reach that user, via a pay-per-click ad at Yahoo, Google, or elsewhere.) Claria’s popunder risks drawing the user’s attention away from Dell — but if the user then clicks on the prominent Dell ad in Claria’s Overture listing, Dell has to pay again for the same user who was already at the Dell site. Why pay Yahoo and Claria to get the user back, when it was they who took the user from Dell in the first place?

Claria’s provision of Yahoo Overture sponsored links also presents ethical concerns. Many advertisers dislike Claria’s practices — including its aggressive methods of becoming installed on users’ PCs, its serious effects on privacy, and its harm to computer performance. Indeed, when I previously revealed that, through another channel, Dell was advertising with Claria in mid 2004, Dell staff sought to distance Dell from Claria, commenting “[T]oday we do not do business with anyone like Claria.” But despite Dell’s stated dislike of Claria, Dell does help fund Claria when Dell purchases pay-per-click ads from Yahoo: Payment flows from Dell to Yahoo to Claria, as shown in the diagram at right. Same for thousands of other Yahoo Overture advertisers.

In the future, Claria purports to plan to shut down its popup business. That’s a move I applaud — it’s been a bad business from the start. But at present Claria still serves lots of popups — including Yahoo Overture popunders as frequently as every few minutes. These ads are big money: Claria’s 2003 SEC S1 discloses receiving $31 million from Yahoo in 2003 alone — despite a relationship only in place for 9 months of that year. Annualizing the payment and taking account of the dramatic increase in pay-per-click fees, Yahoo might now be paying Claria $50 million or more per year. (It’s hard to know for sure because Claria hasn’t filed more recent financial disclosures, and Yahoo doesn’t include this level of detail in its financial reports.)

eXact Advertising – Popups and Sidebars of Yahoo Sponsored Links

A Yahoo Overture auto-opening sidebar, delivered by eXact Advertising, targeting Google search results. A Yahoo Overture auto-opening sidebar, delivered by eXact Advertising, targeting Google search results.

  PPC advertisers
money viewers
   Yahoo Overture   
money viewers
eXact Advertising

The money trail – how funds flow from advertisers to Yahoo Overture to eXact Advertising.

Claria claims to always install with consent — however tricky or ill-gotten, per my testing and documentation. But other Yahoo Overture syndicators can’t even make this claim. On dozens of occasions, I have observed and recorded software from eXact Advertising installed through security holes, with no notice or consent. (Some examples: 1, 2.) I’ve also seen eXact installed by tricky popups claiming to be required to view sexually-explicit videos, and by unrequested popups claiming to offer “browser enhancements.” Others have reported eXact bundled by P2P-distributed videos purporting to offer child pornography, and even by instant messenger worms. In short, when a user has software from eXact, the user is unlikely to have granted meaningful informed consent to the installation, and the user may not have granted any consent at all. Reporters tell me that eXact claims to have fixed these problems, but that’s just not true: I’ve received nonconsensual installations of eXact software this very week. Videos on file.

Despite its poor installation practices, eXact receives Overture sponsored links, shows these advertisements to users, and presumably is paid by Yahoo for doing so.

See screenshot at right, showing an eXact auto-opening sidebar that appeared as I ran a search at Google. The sidebar shows Yahoo Overture links, and clicking a link sends users to Overture and on to the advertiser (without passing through any other search intermediary). Notice the Overture reference in the browser status bar as I hold my mouse over a sponsored link.

To typical users, the eXact-delivered Yahoo Overture sidebar appears to be an integrated part of search results — presumably delivered by Google (or whatever other search engine the user had requested). Notice the absence of any distinctive branding, logo, disclosure, or other identification that the sidebar comes from eXact and Overture. To find such a disclosure, a user must scroll to the bottom of the sidebar. Even there, the disclosure is truncated and hard to read. Screenshot.

eXact’s BullsEye service also shows sponsored link listings in freestanding windows. Here too, results are obtained from Yahoo Overture. Screenshot.

Direct Revenue – Popups and Popunders of Yahoo Sponsored Links

A Yahoo Overture popunder, delivered by Direct Revenue, targeting Dell. Shown after activating the popunder. A Yahoo Overture popunder, delivered by Direct Revenue, targeting Dell. Shown after activating the popunder.

  PPC advertisers (i.e. Dell)  
money viewers
   Yahoo Overture   
money viewers
InfoSpace
money viewers
Direct Revenue

The money trail – how funds flow from advertisers to Yahoo Overture to Direct Revenue.

Direct Revenue installations are at least as poor as eXact. I have numerous videos on file showing DR installed without consent (one such video on my public site). DR also uses various other tricky methods to get installed — like tricky popups, bundles, etc. But DR is perhaps worse than other advertising software in its unusual difficulty of removal (requiring downloading a special uninstaller from DR’s web site). DR is also unusual in its ability to disable and delete other software on a user’s PC.

Despite these troubling practices, DR also shows Yahoo Overture ads. See e.g. the example ad at right. The searchblazer results appeared when I browsed to Dell.com. Notice Direct Revenue’s “Aurora” branding in the upper-left corner and title bar. Although the ad’s body lacks any Direct Revenue branding or logo, the ad was loaded from the search.offeroptimizer.com server, a server under DR’s control. (Offeroptimizer.com is a well-known DR domain.) Furthermore, clicking on a sponsored link within the ad caused traffic that first passed through search.offeroptimizer.com en route to Overture. In short, this ad is not a rogue advertiser buying traffic from Direct Revenue. Rather, these sponsored links were specifically placed by Direct Revenue itself.

When I clicked on the first sponsored link shown at right, traffic flowed as listed below. See also full packet log.

http://xadsj.offeroptimizer.com/c/click.php?c=48685&s=5261&…
http://msxml.infospace.com/_1_B2HUEF099WI63__dirrev.feed.pu1/…
http://www10.overture.com/d/sr/?xargs=…
http://landingstrip.dell.com/landingstrip/ls.asp?CID=8278&LID=230157&…

As indicated in the diagram at right and in the traffic flow above, Yahoo Overture syndicates its ads to InfoSpace, and InfoSpace in turn syndicates these ads to Direct Revenue. This series of relationships makes it particularly hard for Yahoo Overture to know where its advertisers’ ads will appear: Yahoo must count on InfoSpace to assure the quality, ethics, and compliance of InfoSpace’s partners.

This is not the first instance of InfoSpace partners with questionable practices. In June I documented Google ads syndicated to the IBIS Toolbar (also known to become installed without consent). Like Overture ads passing through InfoSpace en route to Direct Revenue, these Google ads were passed from Google InfoSpace to IBIS.

As in the Claria examples above, Direct Revenue syndications of Yahoo Overture ads often ask advertisers to pay for visitors already at their sites. In the example above, Dell was targeted by a list of sponsored links that places Dell in both of the top two positions. If a user clicks on one of these links, Dell pays Yahoo (and ultimately Direct Revenue) for a user who was already at the Dell site. Screenshot.

180solutions – Popups of Yahoo Sponsored Links

A Yahoo Overture popunder, delivered by Direct Revenue, targeting Dell. Shown after activating the popunder. A Yahoo Overture popup delivered by 180solutions.

  PPC advertisers (i.e. Driverloans)  
money viewers
   Yahoo Overture   
money viewers
InfoSpace
money viewers
180solutions

The money trail – how funds flow from advertisers to Yahoo Overture to 180solutions.

When I first posted this piece, I included no mention of 180solutions. My rationale: They’ve been involved in so many widely-publicized spyware scandals — from installing without consent, to installing with euphemisms (but no EULA) at kids sites, to installing at child porn sites — that undisclosed syndication of Yahoo Overture ads seemed like the least of their problems. Perhaps that’s right. But multiple readers asked me whether 180 wasn’t involved also, and why 180 wasn’t included in my write-up. So make no mistake about it: 180 shows Yahoo Overture ads too.

The screenshot at right shows a popup of Yahoo Overture ads delivered by 180solutions. In testing, I click on the ad, and traffic flows to InfoSpace, then to Overture, then to the advertiser. See traffic log below, and full packet log. See also a video of this click, showing the cookies created as a result of the click.

http://searchresults.180searchassistant.com/clicks.php?p==…
http://msxml.infospace.com/_1_YWCU9J03JUL8FV__180sol.feed/…
http://www10.overture.com/d/sr/?xargs=…
http://www.driverloans.com/app/2p1a?x=seoyahoo:value

Other Advertising Software Installed Improperly – Showing Yahoo Sponsored Links

Yahoo Overture ads in an auto-opening sidebar delivered by Sidefind, targeting type-ins to Dell with Dell sponsored links. Yahoo Overture ads in an auto-opening sidebar delivered by Sidefind, showing Dell sponsored links in response to type-in requests for the Dell.com site.

  PPC advertisers (i.e. Dell)  
money viewers
   Yahoo Overture   
money viewers
81.201.104.136
money viewers
trafficengine.net
money viewers
SideFind

The money trail – how funds flow from advertisers to Yahoo Overture to SideFind.

Claria, eXact Advertising, Direct Revenue, and 180solutions are all relatively well-known programs — each installed on millions (or tens of millions) of PCs, and each backed by major investors. But Yahoo also helps to fund vendors who are far less well-known.

Earlier this summer, in the course of documenting Google funding IBIS, I also prepared detailed proof showing how Yahoo ads get syndicated to IBIS too. Video and packet logs on file.

Just this past week, I happened to test a computer infected with a variety of unwanted software (a few disclosed in license agreements; most not). I observed that traffic was sent to Yahoo from both “Slotchbar” (an unrequested toolbar added to my test PC’s browser without my consent) and “SideFind” (an auto-opening browser sidebar, also installed without consent). I have video and packet logs on file, showing these nonconsensual installations as well as their syndication of PPC advertisements from Yahoo Overture. The screenshot at right shows the auto-activating SideFind sidebar, targeting a type-in request for Dell with various sponsored links, largely pointing back to Dell.

These are just a few of the additional examples I have observed and recorded.

In some instances, Yahoo’s dealings with these smaller spyware vendors entail traffic passing through multiple levels of intermediaries. For example, when SideFind sends traffic to Yahoo Overture, the traffic passes through trafficengine.net and then through an unnamed server at IP address 81.201.104.136 (reportedly operated by Copernic/Inktomi) before reaching Overture. See diagram at right, traffic log below, and full packet log.

http://www.sidefind.com/ist/scripts/log_clicks.php?account_id=…
http://feeds.trafficengine.net/click.ashx?key=computers…
http://81.201.104.136/fast-cgi/bsc?context=redir…
http://www6.overture.com/d/sr/?xargs=…
http://landingstrip.dell.com/landingstrip/ls.asp?CID=8278…

In principle, these many levels of intermediation might make it especially hard for Yahoo to know where traffic begins. However, Yahoo ultimately has a direct relationship with some final source who sends the traffic to Yahoo. (In this example, Yahoo has a direct relationship with the operators of the 81.201.104.136 server.) So Yahoo can require that that final source take steps to keep Yahoo’s ads out of spyware. Furthermore, syndicated traffic often includes a HTTP Referer header that gives the name of the originating site. For example, in the Sidefind packet log, Yahoo’s servers receive a HTTP Referer header bearing the domain name sidefind.com, making it easy for Overture to see where traffic began. With its servers specifically receiving the name and URL of the traffic’s source, Yahoo cannot claim not to know where its ads are being shown.

Yahoo’s Failure to Disclose

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, DR, 180, 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.

Yahoo’s marketing materials are silent on the risk of spyware syndication, even where Yahoo’s syndication relationships are large and longstanding (i.e. Claria). Within Yahoo’s marketing materials to solicit new advertisers, Yahoo’s “Publisher Network” page mentions various syndicators of Yahoo ads, but Yahoo fails to mention even a single “adware”-type program. Yahoo’s formal Advertiser Terms and Conditions doesn’t mention adware either, and this document discloses advertisement syndication only to say that Yahoo syndicates ads to “various third parties who may be authorized by Overture to make the Sponsored Listings Marketplace Results available as a link from, an add-on service to, or otherwise in connection with Third Party Products.” Yahoo defines these third-party products broadly, as “Web sites, content, applications and/or e-mails.” “Applications” alludes to spyware — but makes no mention of the specific nature of these applications, nor of the likelihood that these applications install by security exploits, trickery, or taking advantage of users’ naivete.

Only at Yahoo’s privacy page does Yahoo make specific mention of any of its advertising software syndicators. Even there, Yahoo mentions only Claria, and Yahoo calls Claria an “ad network” — without mention of its adware, its software download, and its substantial privacy consequences. Furthermore, Yahoo’s privacy page states only that Yahoo has a “relationship” with Claria — but says nothing about the nature or scope of that relationship, i.e. that Claria shows Yahoo Overture ads. In any event, advertisers are unlikely to look to a page about consumer privacy in order to learn where their ads will be shown.

Given the perceived importance and value of Yahoo’s pay-per-click advertising network, some advertisers might choose to advertise with Yahoo despite the blemish of Yahoo’s dealings with spyware companies. Others might decide not to advertiser with Yahoo at all, if advertising with Yahoo necessarily entails supporting spyware. But where Yahoo fails to disclose these relationships, advertisers are denied this choice.

What Yahoo Should Do

In my view, Yahoo — and other PPC networks facing similar problems — should begin by developing and distributing clear rules for who may syndicate their ads. Last year a Yahoo spokesperson told eWeek that “Overture screens its distribution partners to make sure they gain user permission before downloading software.” “Permission” may sound clear-cut, but in practice it’s a surprisingly imprecise concept. What about “permission” obtained under false pretenses — like promising to fix a user’s clock or to improve security, but actually adding advertising software? What about “permission” obtained from a user at a kids site? What about syndicators that buy traffic from advertising software installed without consent, but that don’t make such software of their own? PPC networks need rules that speak to these situations — presumably forbidding all these methods of trickery and deception.

After clarifying their stance on spyware syndicating their ads, PPC networks need to redouble their efforts at enforcement. Tellingly, even Yahoo’s “permission” standard is violated by the frequent nonconsensual installations of Direct Revenue and eXact Advertising (links above). Nonconsensual installations of these programs are well known to those who test and study spyware, and they’re frequently reported at spyware news sites like Spyware Warrior. PPC network staff need to become familiar with these basic industry sources and testing methods, and they need to enforce their rules accordingly.

At present, Yahoo has many PPC syndicators — apparently hundreds or thousands. (Yahoo does not disclose all its syndicators.) Finding all rogue syndicators may prove hard, especially if Yahoo’s syndicators have further partners of their own (as in the Direct Revenue / InfoSpace and SideFind examples, above). In this article, I’ve focused on a few large and well-known syndicators who rely on software installed on millions of PCs, but smaller players are often harder to find and identify. Nonetheless, I’ve found dozens of rogue PPC syndicators using only a single off-the-shelf PC in my lab. (See above.) With all their resources, big PPC networks (like Yahoo) can surely do far better.

Enforcement also needs to include real penalties for those who break the rules. Merely ejecting a rogue syndicator does not deter future violations: Others see that they can make money from PPC syndication through spyware, anticipating only a slap on the wrist when these practices are discovered. A better enforcement strategy would seek to recapture fees previously paid to rogue syndicators — then refund advertisers for ads shown improperly. If a PPC network adopted this strategy and sued its rogue syndicators where necessary, other rogues would be less anxious to follow.

Beyond advertiser backlash and consumer demand, PPC networks face regulatory pressure to avoid supporting spyware through PPC syndication. For example, in the course of their investigation of Intermix, staff of the New York Attorney General revealed that Yahoo contributed 10% of Intermix’s revenue. NYAG staff say they’re “not ruling out” litigation against Yahoo for funding Intermix. More recently, rumors indicate a possible NYAG investigation of Direct Revenue. Given Yahoo’s past support for Intermix, I wonder how NYAG will react to seeing Yahoo funding Direct Revenue too.

If a PPC network can’t or won’t eliminate rogue syndicators, it could at least grant advertisers the ability to opt out of particular unwanted syndications. Others have offered this suggestion on various occasions (e.g. Kraft seeking to avoid syndicating its ads to white supremacy groups), as to both Yahoo Overture and Google. Affiliate networks all offer this level of granularity — letting each affiliate merchant decide what affiliates may earn fees for promoting it. But to my knowledge, no major PPC search engine offers this level of advertiser control.

Ultimately, PPC syndication offers savvy PPC networks a valuable opportunity — a chance to lead industry efforts to stop the spread of unwanted advertising software. Earlier this week, Azoogle launched its new “MPORT” network with the promise of keeping the network entirely adware-free. With a bit of effort and a renewed commitment to stopping spyware, Yahoo could bring MPORT’s no-adware benefit to Overture advertisers too.

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Microsoft to Buy Claria? updated July 12, 2005

Today’s New York Times reports Microsoft “in talks” to buy Claria. Leading commentators think it’s a bad idea (1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11). I agree.

I first heard this rumor several weeks back, but I laughed it off as too crazy to be taken seriously. What could Claria offer Microsoft? Most obvious is Claria’s large installed base — reportedly some 40-million PCs. But Claria’s installation practices are troubled — tricking users with ads that look like Windows dialog boxes, on kids sites, touting features Claria knows users don’t need (like clock-synchronizers already built into current versions of Windows). And in Claria’s oft-installed bundle with Kazaa, Claria’s long license lacks section headings, making it exceptionally hard for users to figure out what Claria does or to reasonably assess Claria’s terms. (These problems remain, seven months after I first reported them.) Microsoft wouldn’t want installations obtained through such poor practices.

Claria could also offer Microsoft substantial data about users’ surfing habits. A November 2003 eWeek article reported that Claria’s then-12.1 terabyte database was already the seventh largest in the world — bigger than Federal Express, and rivaling Amazon and Kmart. Claria recently told Release 1.0 its database is now 120 terabytes, the fifth-largest commercial Oracle database in the world. All very interesting, and perhaps troubling to those who worry about illicit use of such detailed data. But why would Microsoft invite this unnecessary privacy firestorm?

Claria could offer Microsoft its experience at advertisement targeting. But Claria’s targeting seems surprisingly simple: If a user goes to one car rental site, show an ad for another, whether in a pop-up, a delayed pop-under, or perhaps some subsequent banner ad placed via Claria’s new BehaviorLink program. Microsoft could design a similar system of its own in a matter of months, for far less than the $500 million it would reportedly cost to buy Claria.

Claria does have some interesting patents, a few making surprisingly broad claims as to software and advertisement delivery. But I’m not sure these patents are actually valid. If Microsoft wanted to implement client-side advertisement targeting, the more natural approach would be a design-around that didn’t infringe Claria’s design. Building it themselves avoids taint from Claria’s bad name, bad history, and bad installation practices.

Microsoft’s role as an operating system vendor and anti-spyware developer raises additional worries in buying Claria. Programs like Claria’s damage the Windows experience — bombarding users with annoying pop-ups, not to mention slowing boot time, adding complexity, and risking extra crashes. If Microsoft buys Claria, it would face practical difficulty in continuing to criticize, detect, and remove similar programs from others.

The Times says Microsoft’s Ballmer wants to be “more aggressive” in pursuing Google. But an aggressive strategy need not ignore business ethics — even if Google’s current distributors and partners are less than praiseworthy (1, 2). So I’m surprised that Ballmer reportedly personally approved negotiations with Claria. That said, others within Microsoft apparently oppose the acquisition, and negotiations are reportedly “on the verge” of breaking off. Cooler heads prevail, or so it seems.

It’s worth noting that no one from Microsoft or Claria has officially confirmed the negotiations. Techdirt and SiliconBeat claim this is all just a rumor. I have somewhat more faith in the Times’ reporting procedures; I’d like to think their editors wouldn’t run the story without confirmation from reasonable sources. Alex Eckelberry of Sunbelt offers what seems to me the most natural explanation: Microsoft leaked this story on purpose, as a “trial balloon” to test public response.

Microsoft AntiSpyware now recommends that users "ignore" Claria's presence on their PCs.Update (July 1): A Dozleng.com post reports that Microsoft’s AntiSpyware Beta now recommends that users “ignore” Claria. To confirm this result, I downloaded Claria’s DashBar and Precision Time products, then installed MSAS, all on a fresh virtual PC that hadn’t previously run any of these programs. MSAS’s recommendation and default action was “Ignore.” (See screenshot at right.) In contrast, when last I ran MSAS on a PC with Claria software installed, MSAS recommended removing these same programs. This is exactly the kind of conflict of interest I worried about three paragraphs above — but I didn’t anticipate how quickly this problem would come into effect.

Update (July 8): Apparently Microsoft’s “Ignore” recommendation doesn’t reflect special treatment for Claria in anticipation of an acquisition. Instead, Microsoft recommends “Ignore” for a variety of dubious “adware” programs. Sunbelt reports that Microsoft downgraded Claria to “Ignore” on March 31 — far before acquisition talks reportedly began. A comment from Webroot’s Richard Stiennon claims that Microsoft recently recommended ignoring 180solutions, and Sunbelt adds that Microsoft also recommends ignoring WebHancer and Ezula. My subsequent testing indicates that there are plenty of other “Ignore” programs still to be uncovered. (More on this in the future.)

These odd recommendations demonstrate the misguidedness of Microsoft’s “Ignore” classification. I know of no PC technician who advises users to ignore infection with any of these programs, which give users extra ads without anything offering substantial in return. If Bill Gates sought to clean up a friend’s PC, I bet he’d want all these programs gone. Competing anti-spyware programs all recommend removal. Yet somehow Microsoft’s AntiSpyware app sees no problem.

Has Microsoft given in to vendors’ threats? Or forgotten how badly “adware” damages the Windows experience (ultimately encouraging users to switch to other platforms)? I’ve previously been impressed with Microsoft’s AntiSpyware offering; I’ve often used it and often recommended it to others. But screw-ups like this call Microsoft’s judgment into question. During this sensitive period, with Microsoft unwilling to deny the continued Claria acquisition rumors, Microsoft should be especially careful to put users’ interests first. Instead, Microsoft’s recommendations cater to the interests of the advertising industry. I’m not impressed.

Microsoft’s recently-published response to questions about Claria defends Microsoft’s treatment as the result of ordinary application of Microsoft’s usual criteria, without any special exceptiosn. Perhaps. But if this Microsoft’s criteria say to ignore a program known to be installed through fake-user interface ads on kids sites, showing a EULA only after installation, with a broken uninstaller, then Microsoft’s criteria leave a lot to be desired.

Update (July 12): ClickZ reports that Microsoft has ended acquisition talks with Claria.

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How Google’s Blogspot Helps Spread Unwanted Software

Google claims to be on the right side of the spyware problem. Its May 2004 Software Principles set out lofty (if somewhat vague) standards for installation notice consent. Its Google Toolbar installer gives impeccable disclosure and obtains true, meaningful, informed consent. (See page 7 of my FTC Comments (PDF).) And Google is a victim of spyware: I’ve tested and studied a number of programs that add bogus search results and advertisements to Google.com results, tarnishing Google’s brand and siphoning advertising revenues that would otherwise accrue to Google.

Yet Google is far from blameless in the spyware battle. Of particular concern: Numerous blogs hosted at Google’s Blogspot service contain JavaScript that tries to trick users into installing unneeded software. At one such blog, users are offered a misleading popup that falsely claims "You have an out of date browser which can cause you to get infected with viruses, spam, and spyware. To prevent this, press YES now." If a user declines, the user is shown a second popup instructing "Click Yes to upgrade," followed by the first popup again. If the user declines a second time, a further popup claims "We strongly recommend you upgrade … Click YES Now!" See screenshots below.

A misleading installation attempt shown on a Blogspot page. A misleading popup attempting to encourage users to accept a misleading installation attempt shown on a Blogspot page. A misleading popup attempting to encourage users to accept a misleading installation attempt shown on a Blogspot page.

If a user presses yes, the user receives certain extra software, often including software that many users would call spyware. The screenshots above show an attempted installation of Elitetoolbar. I have also observed similar popups attempting to install software from Crazywinnings (repeatedly falsely claiming "you have to click yes to continue" if users initially decline the installation) and from Direct Revenue. See a video of the repeated Crazywinnings installation attempts. See also additional screenshots (1, 2, 3, 4) of other software installations and/or other infected Blogspot pages.

Who’s Responsible, and Who’s Able to Stop This Mess?

The popups at issue come from a service called iWebTunes.com. iWebTunes recruits blog authors by giving them music to add to their blogs or other web sites. But as users view the resulting blogs, iWebTunes shows software installation popups to attempt to foist extra programs onto users’ computers. These programs likely pay iWebTunes a commission for each resulting installation.

Users have reported unwanted software offered by Blogspot sites since at least September 2004. See a September 15, 2004 blog post complaining of spyware received from iWebTunes. I reported these problems to Google staff last week, including a specific example of an infected site. But so far Google has taken no action to stop the misleading popups on this site or others. A recent Blogspot tech support response admitted the problem, at least generally, but offered no specific approcah or timetable for resolution.

What should Google do? Google already disallows JavaScript within Blogspot.com posts. (Screenshot.) Apparently Google considers embedded JavaScript too risky — too likely to trick, deceive, or otherwise take advantage of users. But Google oddly allows JavaScript to be added to Blogspot headers and navigation bars. This decision should be reversed. Disallow the JavaScript interface by which iWebTunes gets added to Blogspot pages, so Blogspot pages can no longer trigger misleading JavaScript and ActiveX popups from iWebTunes or elsewhere. Of course some JavaScript code is entirely harmless — like the scripts that embed Google AdSense ads, comments, or polls. But Google should hesitate to permit JavaScript from unknown or known-hostile sources.

So Google is in a natural position to stop this problem. But it’s not the only company that could take action here. As I pointed out earlier this month, VeriSign plays a key role in authorizing ActiveX security warnings like that shown above: The misleading popups are only shown if they carry valid digital certificates, and VeriSign is the primary issuer of such certificates. VeriSign’s existing rules disallow using VeriSign-issued certificates “to distribute malicious or harmful content of any kind … that would … have the effect of inconveniencing the recipient.” I consider the programs above to be harmful for their addition of unwanted software including toolbars, silent auto-updaters, and systems that track and transmit certain personal information. Especially when combined with the popups’ false claims ("… out of date browser" and "you have to click yes") and especially in light of the other misleading circumstances of installation, I see ample basis to conclude that the popups are malicious. These software installation attempts are therefore arguably prohibited by existing VeriSign rules. But I’ve seen little sign of VeriSign acting to enforce its rules. VeriSign’s code signing site offers no obvious standards or procedures for assessing or reporting violations.

More on Google and Spyware: Sponsored Link Advertising from So-Called Spyware Removers

These misleading Blogspot popups are not Google’s only ties to spyware companies. Eric Howes has posted a warning he calls Google & Anti-Spyware Products: Be Wary of Paid Search Results. Eric and others have put together a list of “rogue/suspect” anti-spyware applications that are at best useless (failing to detect or remove bona fide spyware) and at worst malicious (installing new spyware of their own). Comparing current Google advertisers for a search on "spyware" with Eric’s impressively detailed list yields surprisingly numerous matches.

According to Google’s Software Principles, companies should "keep good company" by avoiding doing business with those who don’t meet ethical standards. Yet Google somehow continues to show ads for — and accept advertising payments from — companies whose supposed anti-spyware tools merely take advantage of users’ spyware worries. Google has made some progress at cleaning up the most dishonorable advertising for anti-spyware searches, but its AdWords advertising remains a poor, unreliable source for consumers to find reputable, high-quality anti-spyware applications.

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Media Files that Spread Spyware updated January 3, 2005

Users have a lot to worry about when downloading and playing media files. Are the files legal? Can their computers play the required file formats? Now there’s yet another problem to add to the list: Will a media file try to install spyware?

When Windows Media Player encounters a file with certain “rights management” features enabled, it opens the web page specified by the file’s creator. This page is intended to help a content providers promote its products — perhaps other music by the same artist or label. However, the specified web page can show deceptive messages, including pop-ups that try to install software on users’ PCs. User with all the latest updates (Windows XP Service Pack 2 plus Windows Media Player 10) won’t get these popups. But with older software, confusing and misleading messages can trick users into installing software they don’t want and don’t need — potentially so many programs that otherwise-satisfactory computers become slow and unreliable.

Screen-shot of the initial on-screen display. If users press Yes, scores of unwanted programs are installed onto their PCs. Click to enlarge.Screen-shot of the initial on-screen display. If users press Yes, scores of unwanted programs are installed onto their PCs.

I recently tested a Windows Media video file, reportedly circulating through P2P networks, that displays a misleading pop-up which in turn attempts to install unwanted software onto users’ computers. I consider the installation misleading for at least three reasons.

  1. The pop-up fails to name the software to be installed or the company providing the software, and it fails to give even a general description of the function of the software.
  2. The pop-up claims “You must agree to our terms and conditions” — falsely suggesting that accepting the installation is necessary to view the requested Windows Media video. (It’s not.)
  3. Even when a user specifically requests more information about the program to be installed, the pop-up does not provide the requested information — not even in euphemisms or in provisions hidden mid-way through a long license. Clicking the pop-up’s hyperlink opens SpiderSearch’s Terms and Conditions — a page that mentions “receiving ads of adult nature” and that disclaims warranty over any third-party software “accessed in conjunction with or through” SpiderSearch, but that does not disclose installation of any third-party software.

Screen-shot of my Program Files folder, showing some of the programs installed on my test computer.Screen-shot of my Program Files folder, showing some of the programs installed on my test computer.

On a fresh test computer, I pressed Yes once to allow the installation. My computer quickly became contaminated with the most spyware programs I have ever received in a single sitting, including at least the following 31 programs: 180solutions, Addictive Technologies, AdMilli, BargainBuddy, begin2search, BookedSpace, BullsEye, CoolWebSearch, DealHelper, DyFuca, EliteBar, Elitum, Ezula, Favoriteman, HotSearchBar, I-Lookup, Instafin, Internet Optimizer, ISTbar, Megasearch, PowerScan, ShopAtHome Select, SearchRelevancy, SideFind, TargetSavers, TrafficHog, TV Media, WebRebates, WindUpdates, Winpup32, and VX2 (Direct Revenue). (Most product names are as detected by Lavasoft Ad-Aware.) All told, the infection added 58 folders, 786 files, and an incredible 11,915 registry entries to my test computer. Not one of these programs had showed me any license agreement, nor had I consented to their installation on my computer.

I retained video, packet log, registry, and file system logs of what occurred. As in my prior video of spyware installing through security holes, my records make it possible to track down who’s behind the installations — just follow the money trail, as captured by the “partner IDs” within the various software installation procedures. When one program installs another, the second generally pays the first a commission, using a partner ID number to track who to pay. These numbers make it possible to figure out who’s profiting from the unwanted installations and, ultimately, where the money is going.

Figuring Out Who’s Responsible

Most directly responsible for this mess is ProtectedMedia — the company that caused my computer to display the initial misleading pop-up shown above. ProtectedMedia invited the installation of some unwanted programs, which in turn installed others, but ProtectedMedia could readily stop these behaviors, e.g. by disabling its misleading pop-up installation attempts.

Screen-shot of the icons added to my test computer's desktop. Note a new link to Dell -- an affiliate link such that Dell pays commissions when users make purchases after clicking through this link.Screen-shot of the icons added to my test computer’s desktop. Note a new link to Dell — an affiliate link such that Dell pays commissions when users make purchases after clicking through this link.

But who pays ProtectedMedia? As I started to follow the money trail, I was surprised to see that some of the unrequested programs receive funds from respected online merchants. Several of the spyware installations added new toolbars to my computer’s browser and new icons to my desktop. If users click through these links, then make purchases from the specified merchants, the merchants pay commission to the affiliates who placed these toolbars and icons on users’ PCs. Even large, otherwise-reputable companies pay commissions through these systems, thereby funding those who install unwanted software on users’ computers. In my testing, I received affiliate links to Amazon, Dell, Hotwire, Match.com, Travelocity, and others. Many of these links pass through affiliate tracking networks LinkShare and Commission Junction.

Of course, these merchants may not have intended to support spyware developers. For example, merchants may have approved the affiliates without taking time to investigate the affiliates’ practices, or the affiliates’ actions may be unauthorized by the merchants. (That’s what Dell said when I previously found Dell ads running on Claria.) In future work, I’ll look in greater detail at which merchants pay affiliate commissions to which spyware programs, and I’ll also further document which merchants purchase advertising from companies whose software sneaks onto users’ computers.

Other companies partially responsible for these practices are the providers of the unwanted software — companies that pay commissions to distributors foisting their software onto users’ computers. In general there’s no reason to expect honorable behavior by providers of unwanted software. But some of the programs I received come from big companies with major investment backing: 180solutions received $40 million from Spectrum Equity Investors; Direct Revenue received $20 million from Insight Venture Partners; and eXact Advertising (makers of BargainBuddy and BullsEye) received $15 million from Technology Investment Capital Corp. With so much cash on hand, these companies are far from judgment-proof. Why are they paying distributors to install their software on users’ computers without notice and consent?

The problematic installations ultimately result from the “feature” of Windows Media Player that lets media files open web pages. But most users will only receive the contaminated files if they download files from P2P filesharing networks. Of course, rogue media files are but one way that P2P networks spread spyware. For example, users requesting Kazaa receive a large bundle of software (including Claria’s GAIN), after poor disclosures that bury key terms within lengthy licenses, without even section headers to help readers find what’s where. Users requesting Grokster receive unwanted software even if they press Cancel to decline Grokster’s installation (details).

Ed Bott offers an interesting, if slightly different, interpretation of these installations. Ed rightly notes that users with all the latest software — not just Windows XP Service Pack 2, but also Windows Media Player 10 — won’t get the tricky pop-ups described above. Ed also points out that Windows Media Player displays of ActiveX installation prompt pop-ups are similar to deceptive methods users have seen before, i.e. when web sites try to trick users into installing software. True. But I think Ed gives too little weight to the especially deceptive circumstances of a software installation prompt shown when users try to watch a video. For one, legitimate media players actually do use these prompts to install necessary updates (i.e. the latest version of Macromedia Flash), and Windows Media Player often shows similar prompts when it needs new codecs or other upgrades. In addition, the unusually misleading (purported) product name and company name make it particularly easy to be led astray here. Users deserve better.

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Empirical Analysis of Google SafeSearch

Google offers interested users a version of its search engine restricted by a service it calls SafeSearch, intended to omit references to sites with “pornography and explicit sexual content.” However, testing indicates that SafeSearch blocks at least tens of thousands of web pages without any sexually-explicit content, whether graphical or textual. Blocked results include sites operated by educational institutions, non-profits, news media, and national and local governments. Among searches on sensitive topics such as reproductive health, SafeSearch blocks results in a way that seems essentially random; it is difficult to construct a rational non-arbitrary basis for which pages are allowed and which are omitted. Full article.