Zango Tries To Reinstall Trust

Zango, formerly known as 180solutions, recently agreed to settle Federal Trade Commission charges that it used unfair and deceptive methods to distribute adware. Founder and CEO Keith Smith stopped by InformationWeek to talk about his reformed company and to address charges that bad advertising practices continue at Zango despite the agreement with the FTC.

Smith: There are two things, and we've been saying this for a while now. One is some clarity around legislation and what the official rules are. Obviously, with any Internet business, if you have 50 different states that pass 50 different laws, it's very difficult. So we have supported for a long time federal legislation and some sort of clarity from a federal perspective. And we think we've got the start of that with the FTC. We think that's a very, very good thing. At the same time, the industry needs to do more. And we think that that's actually happening. We really support the TRUSTe standards. TRUSTe came out about a year ago now with its trusted download program, and they just announced it in beta about two weeks ago. We think that will add clarity to what is spyware and what is not spyware.

InformationWeek: Is that likely to be effective given that so many consumers understand the subject so poorly?

Smith: The TRUSTe certification process isn't a consumer certification process. It's a business certification process. It's a way for a company to be able to be certified by TRUSTe and then advertisers, publishers, content providers—all the businesses that we interact with—can say, I either know that this guy is spyware or not spyware and I can decide to do business with him or not. And that's really the key because if there's an inappropriate actor who isn't playing by the rules, who's still doing things that are inappropriate, if they can't get access to any advertising dollars, then it's pointless to try to install their software. We think that's a very good thing for this industry because it will help choke off the bad actors at the money source.

InformationWeek: Have you resolved Ben Edelman's recent complaint that Zango isn't complying with the terms of its FTC settlement?

Smith: What I'll say is we have a line-by-line response I'll be happy to share with you. I'd prefer not to get into the details myself. I will say this: There are people, and I won't identify anyone specifically, but if you look at the loud detractors of us in particular—not of the space, because spyware is a problem—but the loud detractors of Zango, most of them, if not all of them, have a direct financial benefit to continue to churn out fear about us and about this space. Whether they're selling software or consulting services, they have a direct financial incentive to make us look bad. Second, what I'd say is we've hired Richard Purcell, the former chief privacy officer at Microsoft. He's the chairman of TRUSTe, he knows the security space very well, and he's doing an exhaustive audit of us to make sure we're in full compliance with the FTC settlement we signed.

InformationWeek: Is click fraud an issue for you?

Smith: It's not. It's non-existent in our network, not because we're super-smart guys or anything. It's just the way our system works. What's interesting about that is that the problems the big search players are having right now are the direct result of the same things that affected us in terms of bad distribution and the problems we had previously, which is to say third-party distribution of their search listings. So when a big search player works with a direct publisher who's publishing their search listings, those guys don't commit click fraud. That's not where click fraud happens. It happens when they syndicate their search listings to folks who can then syndicate it to whomever they want, third-party distribution of search listings. That's where click fraud comes from. And until the search industry gets serious about eliminating third-party distribution of their search listings, click fraud will continue to happen. It's a painful choice but it's the right choice.