Zango Shuts Down

SEATTLE -- Adware company Zango, which has faced lawsuit after lawsuit from the government, consumer groups and private firms, has closed its doors.

Neither Zango nor its attorneys could be reached for comment, but while the Zango consumer website remained up and running as of Wednesday morning the ZangoCash site was down.

Various news outlets have reported the company's demise, citing crushing debts as well as entanglement in a lawsuit filed last year by Epic Cash. The suit accused Zango and AdultFriendFinder of unfair competition, conversion and unjust enrichment, all stemming from Zango's unauthorized placement of pop-up ads on the Epic Cash website. Epic Cash's attorneys told they would be unable to comment until more information on the Zango shut-down is available.

Zango repeatedly has been accused of clandestine adware placement on PCs. In 2006, the company settled a Federal Trade Commission lawsuit for $3 million.

UK news site The Register reported video search engine company Blinkz has purchased a portion of Zango's assets.

"The bank foreclosed on Zango and Blinkx purchased some technical assets from the bank, including some [intellectual property] and hardware, which constituted about 10 percent of Zango's total assets," a Blinkx spokeswoman said.

Originally launched as 180 Solutions before becoming Zango, the company raised $40 million from Spectrum Equity Investors in 2004 and grew to more than 230 employees at one point, though by 2008 Zango had laid off 118 workers, more than half of its staff.

While Zango has claimed its problems stemmed from "rogue affiliates," charges of unauthorized adware installation have continued. Zango defended its products as software, while security firms have continued to consider it adware, with some even calling it out-and-out unwanted spyware or malware.

Zango attempted to fire back at its accusers, such as spyware removal services Symantec, Zone Labs, Kaspersky Lab and PC Tools. A 2007 lawsuit against Kaspersky remains in court, along with the Epic Cash suit.

Computerworld noted that last May, prominent antispyware researcher Ben Edelman was still accusing Zango of providing improperly labeled sexually explicit material.

 "I'm not sure it's actually true that all the deceptive installations stopped so long ago," Edelman told Computerworld in an email.

 "Zango never offered anything sufficient to compensate users for its substantial intrusion onto their PCs," Edelman said. "How much would a company have to pay you to get you to let them track your browsing and to show you pop-up ads? Maybe if they gave me free cable/DSL, but even then that probably would not be enough."

Fanning the flames further, security researcher Chris Boyd of FaceTime Communications suggested in August 2008 that Zango profited from pirated films, including Warner Bros.' mega-hit The Dark Knight.

In a lengthy blog post Tuesday, Zango co-founder and former chief tech guru Ken Smith confirmed the Blinkx purchase and defended much of the company's history. According to Smith, Zango's history will come to an end with a "fire sale."

Smith blamed distribution, the departure of marketing and publishing partners, and consumer protests for the company's collapse.

"Back in 2003-2005 we partnered with some people that we should never have partnered with," he wrote. "We almost completely outsourced our distribution to them, and we let them promote and install our software without adequate oversight or supervision."

Smith went on to claim most installs received "inadequate consent," asserting that users "technically" could decline, but weren't "presented with enough information to make an informed choice." Consumer advocates disagreed, saying the majority of users never knew about the adware until it suddenly turned up on their PCs.

Zango isn't the only controversial adware to be bashed repeatedly by various concerns.  Similar companies, now gone, include Claria, WhenU and DirectRevenue. As suggested by various Tech blogs, this likely closes the book on such an adware business model.