Adware Makers 180solutions, Hotbar Merge

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June 07, 2006 (2:55 PM EDT)

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By Gregg Keizer , TechWeb Technology News

180solutions, already a major adware distributor, on Wednesday announced that it had merged with the Israeli company Hotbar, also an adware maker, in an effort to scale up its reach to advertisers and consumers. No financial details of the deal were disclosed.

Both companies have fought security analysts and privacy critics, who have accused them of invading users' PCs without permission, spawning pop-up ads, surreptitiously changing computer settings, and making it difficult to uninstall their software. In 2005, Symantec sued Hotbar for threatening it with lawsuits if the security giant didn't remove the Hotbar software from its list of adware and spyware. (In March, Symantec reached an out-of-court settlement with Hotbar.)

180solutions, meanwhile, has been targeted by the likes of the Center for Democracy and Technology, which in January petitioned the Federal Trade Commission (FTC) to shut down the company.

"We think of what we do as part of the content economy," said York Baur, 180's head of business development, on Wednesday. "We're not much different from any other content provider [on the Internet] except that we're funded on the basis of desktop-based advertising."

The marriage between Hotbar and 180solutions is perfect, argued Baur.

"It provides us with a much larger scale. It doubles the number of users and [monthly] installs, and makes us more interesting to the advertising community," Baur said. He claimed that together the two sport 30 million users overall, with 150,000 new software installs each day.

The merged companies will sport a new name: Zango, after the consumer brand that 180solutions has been using for two years. While specifics are hard to come by in the privately-held business of adware, Baur said that the new venture is the world's largest distributor.

"We've been guilty of brand schizophrenia," said Baur in explaining why it's consolidating under the Zango name. He dismissed a question whether the change was an attempt to walk away from the 180solutions name because of its negative adware connotations. "It's not our goal to pretend problems didn't [once] exist, or hide from our past. We'd be foolish to sweep that under the carpet."

180solutions has made efforts to clean up its distribution network -- in the past it blamed "rogue" distributors for installing its software, such as 180search Assistant, without users' permission -- and to be a better Internet citizen.

"We've fixed [those] problems to the extent they can be fixed," said Baur. "This [business] model works, and we're very proud of the model we've built."

Spyware analyst Richard Stiennon of IT-Harvest disagreed. "I think this is more a thrashing of two fish dying in the bottom of a boat than a merger of companies with working business models," Stiennon said.

"I'm really shocked that Hotbar would take on the liability of likely facing [New York Attorney General] Eliot Spitzer's wrath by merging with 180solutions."

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