Claria Drops Kazaa Distribution, Acquisition Rumors Swirl

  |  July 1, 2005   |  Comments

UPDATE: The adware player rids itself of a controversial partner, which it once described as 'significant' to its business.

Behavioral targeting adware firm Claria has quietly dropped one of its most visible and controversial distribution partners, file sharing software player Kazaa.

The move comes as published reports fuel speculation about a possible $500 million acquisition by Microsoft. The news also surfaces in the wake of a U.S. Supreme Court decision that peer-to-peer players like Kazaa can be held responsible for the copyright infringement of their users.

Claria declined comment on possible acquisition talks, and Chief Marketing Officer Scott Eagle said the decision came before the Supreme Court ruling was handed down. Eagle characterized the move as part of an ongoing effort by Claria to establish relationships with more mainstream publishers. Claria's software has distribution on approximately 40 million desktops.

"This is just another move in the evolution of the company, as we are growing the behavioral business," Eagle told ClickZ.

The decision to drop Kazaa likely wasn't taken lightly. In April 2004, when Claria filed for an initial public offering, which was later withdrawn, the company described its relationship with Kazaa publisher Sharman Networks as "significant."

"We currently acquire a substantial portion of our new users through downloads of the Kazaa Media Desktop," Claria said in its filing. "We expect that our relationship with Sharman Networks will continue to be responsible for a substantial portion of the new installations of our GAIN AdServer software in the future."

Eagle said the company earlier this year also completed its phase-out of Active X control distribution, but anti-spyware crusader Ben Edelman disputes this assertion. Though Eagle claimed Claria had dropped the distribution entirely by the end of the first quarter, Edelman said he'd seen Active X installations occuring as recently as April.

Claria, and the adware space as a whole, have been dogged by privacy concerns, worries about consumer acceptance of pop-up ads, and myriad lawsuits. The company has, in recent years, taken steps to clean up its act -- changing its name, hiring a well-regarded chief privacy officer, reducing its dependence on the pop-up format, and settling most of the lawsuits against it.

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ABOUT THE AUTHOR

Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

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