April 29, 2005
By AL BAKER
http://www.nytimes.com/2005/04/29/nyregion/29internet.html?th&emc=th
The New York Times
The attorney general, Eliot Spitzer, sued Intermix Media, a
large Internet marketing firm, accusing it of embedding "several types of
invasive and annoying" programs on its Web domains that can pop up, route
users to unwanted sites or link them to Intermix's services and clients. The
accusations were in a complaint that was filed on Thursday in State Supreme
Court in
"This is the type of thing that makes users feel not in
control of their own Internet browsing habits and less likely to use
e-commerce," said Ken Dreifach, the chief of Mr. Spitzer's Internet
Bureau. "We are trying to get rid of this nuisance."
Mr. Spitzer's civil complaint comes amid a crush of protests
from Internet users about invasive programs. To battle the problem, state and
national lawmakers have written legislation to establish or strengthen
sanctions for wrongly distributing software. In
In recent years, companies have tried to sneak what consumer
advocates call parasitic software into computers that tracks users' browsing
habits, but government inquiries into such practices have been rare, said Ben
Edelman, a Harvard University researcher who studies spyware. Last year the
Federal Trade Commission brought suit against two companies that made false
claims to induce users to install their programs, he said.
The spyware technology erodes the trust of customers, slows
their computer functions and wastes time deleting it, all things that hurt
e-commerce, said Ari Schwartz, associate director at the Center for Democracy
and Technology, a nonprofit group that advocates for Internet privacy.
State officials said that in the Intermix case, the simple
downloading of a game, screen saver, cursor or other file-sharing program could
download programs to a user's hard drive that summon unwanted pop-up ads or
display unwanted toolbars.
"Tens of millions" of downloads have occurred,
they said, including more than 3.7 million in
An official with Intermix, in a statement posted on Thursday
on the company's Web site, said that the company neither promoted nor condoned
spyware, and that many of the practices being challenged by Mr. Spitzer began
under the company's previous leadership. The official, Christopher Lipp, said
the company wanted to put "this legacy behind it," and hoped to reach
"an appropriate and amicable resolution" in talks with the attorney
general's office.
"We voluntarily ceased distribution of the applications
at issue earlier this month," said Mr. Lipp, who said the company, begun
in 1999, was committed to consumer privacy. "Neither the company's toolbar
nor redirect application has been used to collect personal information or spy
on the Internet or other activities of the user."
On Wall Street, the inquiry has had a profound effect on
Intermix, a publicly traded company. "The stock price has halved since it
became public two weeks ago that Spitzer was investigating," said John
Tinker, an equity research analyst who writes investment reports on Intermix
for ThinkEquity, a Wall Street investment bank.
Shares of the company fell 83 cents, or 17 percent, to
$3.97, after trading on Thursday on the American Stock Exchange, said Mr.
Tinker. He said the company changed its name a year ago from eUniverse,
restructured and was concentrating on areas "not being investigated."
On its Web site, Intermix labels one of its two divisions as
"one of the world's leading Web destinations for shareable interactive
entertainment." It also reports generating $250,000, since its inception,
on downloads by New Yorkers.
The company is accused of violating the state's General
Business Law, which prohibits false advertising and deceptive business
practices, as well as
Facing such stiff fines, Mr. Tinker said, "The real
question here is what is the settlement going to be? Historically, that is
normally what happens in these cases."