Adware is software, installed with some minimal level of user consent, which monitors Internet usage in order to display ads from third parties. These may be distinguished from more malicious programs, “spyware,” which are installed exclusively without user consent, either by drive-by downloads or browser hijacking. However, some third-party developers and distributors may bundle adware in drive-by download packages.
This series will focus on the two companies which are the most prominent in developing adware: Claria Corp. (“Claria”) and WhenU.com (“WhenU”). Claria, formerly known as The Gator Corp., distributes an adware program called GAIN and sells advertising on the GAIN Network. WhenU’s adware program is SaveNow. WhenU and Claria have been the most successful at attracting litigation from web site publishers and trademark owners.1
Claria and WhenU distribute adware by offering Internet users a quid pro quo. In exchange for occasionally viewing pop-up ads, consumers get free software that would otherwise cost about $30. Claria offers utilities which allow users to securely store passwords, search the web from a desktop toolbar, receive weather forecasts, manage a calendar and sync a personal computer clock with an atomic clock. WhenU offers a similar array of utilities. In addition, Claria and WhenU will pay third-party software companies for distributing GAIN or SaveNow bundled with other free software. Many internet users find adware installed on their systems as a result of installing peer-to-peer programs. Claria relies heavily on its bundling agreement with Shaman Networks’ KaZaA Media Desktop in order to attract new users.
Users can install GAIN and SaveNow much more easily than they can remove these programs. When installed as a component as other programs, neither GAIN nor SaveNow appear in the Windows “Add/Remove Program” feature. Instead, the ad server is installed as a component of its host application. In order to be able to remove these programs users must be aware of which application is sponsored by the adware. The adware programs are intentionally difficult to uninstall. In order to fully remove its software from a computer, Claria requires affirmative consent, so as to protect users from “unintentional, unauthorized or automated uninstallation of your GAIN Publishing software.”
The installed base
In April 2004, 453.9 million people have access to the Internet worldwide. In the US, nearly 75% of the population has access to the Internet and almost 175 million Americans are active internet users. More than 90% of these internet users access the internet using a Microsoft Windows operating system and so are able to use the Claria and WhenU software.
WhenU estimates that 30 milllion users have WhenU?s SaveNow installed . SaveNow has been downloaded about 100 million times. Of those 100 million downloads, 75 million copies were uninstalled from the host computer. PC Pitstop estimates that 1.3% of Internet users run SaveNow. More than 400 advertisers place ads on WhenU.
Claria claims more than 40 million users and 900 advertisers on GAIN. During March 2004, 29.6 million people saw advertising through the GAIN application. Users spend an average of 1 minute and 16 seconds on Claria web properties per visit. In a survey of visitors to its web site, PC Pitstop estimates that between 4% and 5% of Internet users have GAIN installed on their systems. In comparison, the most popular television programs in the US draw audiences of nearly 23 million viewers.
Adware Annoys Users and Publishers
Adware is not only an annoyance, but it is an increasingly widespread one. One study found an average of 5 adware programs installed per surveyed computer. For a workshop on spyware and adware, the FTC received more than 200 comments from industry associations, companies, IT professionals and individual Internet users. The vast majority of comments reflect the desire of Internet users to be free from unwanted pop-up advertisements.
Two kinds of parties find themselves affected by adware: website publishers and end users. End users feel like they are losing control over their computers. While browsing the web, unwanted windows containing advertisements, often for pornography, will pop up over and under their web browser windows. Less sophisticated users wonder why browsing the Internet became so distracting. Tech support has to spend time dealing with cleaning computers from spyware. Computer manufacturer Dell reports that adware is the ?No. 1 reason? why consumers call Dell for technical support.
Website publishers worry that ads will drive away business to competitors? sites and divert business away.
Publishers worry that pop-up ads over their sites will confuse consumers about the source of the ads and create a worse impression of their websites. Publishers fear that third party pop-up ads are defacing their websites. Consumers have negative impressions of websites that display advertising in pop-up and pop-under windows. 78% of Internet users find pop-up ads ?very annoying? and 75% find pop-under ads ?very annoying.? One media analyst expects consumers to regard pop-up ads with particular disdain: ?going forth, [pop-ups] will be increasingly associated with lower-end sites and grittier e-commerce functions. Imagine the pop-up ad becoming the carnival barker of the Internet, full of sales bluster and false promises of what lurks behind the tent door that respectable people would rather not enter.?
Many adware users believe that the owners of the websites over which the ads appear place the pop-up ads displayed by the adware software. In a survey of GAIN users, more than 40% believe that GAIN pop-up ads were placed or approved by the website over which those ads appeared. 29.8% of the respondents thought the website on which the pop-up ad appeared was responsible for causing the ad to appear. Another 10.6% of respondents thought the website received money or otherwise gave permission for the GAIN ad to appear. An equal number of users believe that GAIN is responsible for the ads appearing on their screen as users who believe that the triggering website is responsible for the ad. Although most consumers feel that the appearance of GAIN pop-up ads will not affect the opinion of the triggering website, 33.2% of consumers would have a less favorable opinion of that company. Users ?expect the web site to control that problem.?
1 See WashingtonPost.Newsweek Interactive Co. v. Gator Corp., 2002 U.S. Dist. LEXIS 20879 (E.D.Va., 2002); In re: Gator Corp. Software Trademark & Copyright Litigation, 259 F.Supp.2d 1378 (J.P.M.L., Apr. 22, 2003); U-Haul Int?l, Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723; Wells Fargo & Co., et al. v. WhenU.com, 293 F.Supp.2d 734 (E.D.Mich, 2003); 1-800 Contacts, Inc. v. WhenU.com, 69 U.S.P.Q.2d 1337 (S.D.N.Y. 2003).