Notorious adware vendor Zango shuts its doors
Former exec admits illegal software installations aided downfall
Gregg Keizer
April 20, 2009 (Computerworld)

Zango Inc., the adware distributor fined $3 million by the Federal Trade
Commission in 2006 for sneaking software onto people's PCs, has closed its
doors after being acquired by video search engine company Blinkx PLC.

Zango's former chief technology officer blamed the company's demise on
several factors, but at the top of the list were the very practices that got
it in hot water with the FTC -- and with security analysts who had labeled
the company's software spyware.

"So why did Zango ultimately fail? 1: Zango screwed up its distribution,"
Ken Smith, a co-founder who stepped down from his CTO spot last summer, said
in a long entry on his personal blog yesterday.

"Back in 2003-2005, we partnered with some people that we should never have
partnered with," Smith admitted. "During that time period, my best estimate
is that something like 4% of our installs during that time period were
completely silent... the result of affiliates using browser security holes
to install Zango's software with no knowledge or consent by the user."

In 2006, Zango settled FTC charges that it used unfair and deceptive
practices to download software to users' PCs and agreed to pay a $3 million
fine. As late as May 2008, however, noted antispyware researcher Ben Edelman
blasted Zango for providing sexually explicit material without labeling the
content as such.

In August 2008, security researcher Chris Boyd, the director of malware
research at FaceTime Communications Inc., claimed Zango profited from
pirated movies, including that year's blockbuster The Dark Knight.

Zango's Smith saw it differently. "The bigger problem was that the vast
majority of our installs received inadequate consent: the user technically
had an opportunity to decline the install, but wasn't presented with enough
information to make an informed choice," he wrote.

He also claimed that Zango cleaned up its act long ago. "Well before the FTC
ever came knocking on our door, we were working [hard] to fix it," he
argued. "It's been years since the last inappropriate Zango install, and
Zango's notification and consent is by any reasonable standard better than
Yahoo's, better than Microsoft's, and better than Google's.

"But it was too late: the damage had been done," he added.

Today, Edelman agreed that Zango's practices led to its doom. "Zango could
never get over its history of non-consensual and deceptive installations,"
he said in an e-mail. "Pay partners to install software without user consent
or through all manner of deception, and it will be hard to later convince
users to offer their trust or praise."

He questioned whether Smith had his timeline right. "I'm not sure it's
actually true that all the deceptive installations stopped so long ago,"
Edelman said.

"Having a bad reputation as an Internet company is somewhat worse than
having a bad reputation in high school," Smith said. "Instead of not getting
invited to the cool parties, you find yourself unable to close deals with
strategic partners, which is a lot worse."

That wasn't the only reason Zango crashed and burned, Edelman countered.
"Zango never offered anything sufficient to compensate users for its
substantial intrusion onto their PCs," he said. "How much would a company
have to pay you to get you to let them track your browsing (every page you
visit) and to show you pop-up ads? Maybe if they gave me free cable/DSL, but
even then that probably would not be enough."

Last June, Zango laid off 68 people, about one-third of its workforce, in a
move Smith said was tied to the introduction of new adware platform.

Zango did not respond to a request for comment Monday.