Zango, Inc., Formerly Kown as 180solutions, Inc.; Analysis of Proposed Consent Order to Aid Public Comment, 65822-65824 [E6-18912]
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sroberts on PROD1PC70 with NOTICES
65822
Federal Register / Vol. 71, No. 217 / Thursday, November 9, 2006 / Notices
proposed Consent Agreement requires
that: (1) Watson terminate its marketing
agreement with Interpharm, thereby
returning all of its rights to generic
hydrocodone bitartrate/ibuprofen back
to Interpharm; (2) Andrx divest its rights
and assets to generic glipizide ER to
Actavis, including assigning its supply
agreement with Pfizer, Inc.; and (3)
Andrx divest its rights and assets related
to the eleven generic oral contraceptives
to Teva, and supply Teva with the
products for five years in order for Teva
(or its designated contract manufacturer)
to obtain all necessary FDA approvals to
manufacture and sell the products
independently.
The acquirers of the divested assets
must receive the prior approval of the
Commission. The Commission’s goal in
evaluating possible purchasers of
divested assets is to maintain the
competitive environment that existed
prior to the acquisition. A proposed
acquirer of divested assets must not
itself present competitive problems.
Interpharm specializes in the
development, manufacture, and
marketing of generic pharmaceutical
and over-the-counter products.
Interpharm currently manufactures and
markets 23 generic pharmaceutical
products, and has ten ANDAs under
review by the FDA. As a contract
manufacturer for Watson’s product,
Interpharm is an acceptable acquirer of
generic hydrocodone bitartrate/
ibuprofen because it already has the
experience, know-how, and
manufacturing infrastructure to produce
and sell generic hydrocodone bitartrate/
ibuprofen in the United States.
Interpharm understands the scientific
and technical details of generic
hydrocodone bitartrate/ibuprofen
because it formulated, developed, and
tested the product, and registered the
product with the FDA. Moreover,
Interpharm will not present competitive
problems in any of the markets in which
it will acquire a divested asset because
it currently does not compete in those
markets. With its resources, capabilities,
good reputation, and experience
marketing generic products, Interpharm
is well-positioned to replicate the
competition that would be lost with the
proposed acquisition.
Actavis is a leading developer,
manufacturer, marketer, and distributer
of generic pharmaceutical products, and
is an acceptable acquirer of generic
glipizide ER. Actavis has an extensive
distribution network in the United
States, with three major manufacturing
facilities and approximately 162
pharmaceutical products in the U.S.
market. Actavis also has experience
obtaining FDA approvals for generic
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16:26 Nov 08, 2006
Jkt 211001
pharmaceutical products. While Actavis
currently does not compete in the
market for the divested assets, it has the
resources, capabilities, good reputation,
and experience necessary to restore
fully the competition that would be lost
if the proposed Watson/Andrx
transaction were to proceed
unremedied.
Teva is a global pharmaceutical
company specializing in the
development, production, and
marketing of generic and branded
pharmaceuticals. Founded in 1901 and
headquartered in Petach Tikva, Israel,
Teva employs approximately 25,000
people worldwide and has production
facilities in Israel, North America,
Europe, and Mexico. Teva and its
affiliates are the world’s largest generic
pharmaceutical company with over 300
generic products, representing $6.6
billion in estimated 2006 revenue.
Because of its current agreement with
Andrx, and its well-known reputation
and experience in the pharmaceutical
industry, Teva is ideally positioned to
be a viable, independent competitor in
the eleven generic oral contraceptive
markets. The acquisition of the eleven
generic oral contraceptive products by
Teva would effectively restore the
competition that would be lost with the
proposed merger.
If the Commission determines that
either Interpharm or Actavis is not an
acceptable acquirer of the assets to be
divested, or that the manner of the
divestitures to Interpharm, Actavis, or
Teva is not acceptable, the parties must
unwind the sale and divest the Products
within six (6) months of the date the
Order becomes final to another
Commission-approved acquirer. If the
parties fail to divest within six (6)
months, the Commission may appoint a
trustee to divest the Product assets.
The proposed remedy contains
several provisions to ensure that the
divestitures are successful. The Order
requires Watson and Andrx to provide
transitional services to enable the
Commission-approved acquirers to
obtain all of the necessary approvals
from the FDA. These transitional
services include technology transfer
assistance to manufacture the Products
in substantially the same manner and
quality employed or achieved by
Watson and Andrx.
The Commission has appointed
Francis J. Civille as the Interim Monitor
to oversee the asset transfer and to
ensure Watson and Andrx’s compliance
with all of the provisions of the
proposed Consent Agreement. Mr.
Civille has over 27 years of experience
in the pharmaceutical industry. He is a
highly-qualified expert in areas such as
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Fmt 4703
Sfmt 4703
pharmaceutical research and
development, regulatory approval,
manufacturing and supply, and
marketing. He has provided consulting
services in healthcare business
development to major pharmaceutical
companies, biotechnology companies,
universities, and government agencies.
In order to ensure that the Commission
remains informed about the status of the
proposed divestitures and the transfers
of assets, the proposed Consent
Agreement requires Watson and Andrx
to file reports with the Commission
periodically until the divestitures and
transfers are accomplished.
The purpose of this analysis is to
facilitate public comment on the
proposed Consent Agreement, and it is
not intended to constitute an official
interpretation of the proposed Order or
to modify its terms in any way.
By direction of the Commission, with
Commissioner Rosch recused.
Donald S. Clark,
Secretary.
[FR Doc. E6–18916 Filed 11–8–06; 8:45 am]
BILLING CODE 6750–01–P
FEDERAL TRADE COMMISSION
[File No. 052 3130]
Zango, Inc., Formerly Kown as
180solutions, Inc.; Analysis of
Proposed Consent Order to Aid Public
Comment
Federal Trade Commission.
Proposed Consent Agreement.
AGENCY:
ACTION:
SUMMARY: The consent agreement in this
matter settles alleged violations of
federal law prohibiting unfair or
deceptive acts or practices or unfair
methods of competition. The attached
Analysis to Aid Public Comment
describes both the allegations in the
draft complaint and the terms of the
consent order—embodied in the consent
agreement—that would settle these
allegations.
DATES: Comments must be received on
or before December 5, 2006.
ADDRESSES: Interested parties are
invited to submit written comments.
Comments should refer to ‘‘Zango, Inc.,
File No. 052 3130,’’ to facilitate the
organization of comments. A comment
filed in paper form should include this
reference both in the text and on the
envelope, and should be mailed or
delivered to the following address:
Federal Trade Commission/Office of the
Secretary, Room 135–H, 600
Pennsylvania Avenue, NW.,
Washington, DC 20580. Comments
containing confidential material must be
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Federal Register / Vol. 71, No. 217 / Thursday, November 9, 2006 / Notices
sroberts on PROD1PC70 with NOTICES
filed in paper form, must be clearly
labeled ‘‘Confidential,’’ and must
comply with Commission Rule 4.9(c).
16 CFR 4.9(c) (2005).1 The FTC is
requesting that any comment filed in
paper form be sent by courier or
overnight service, if possible, because
U.S. postal mail in the Washington area
and at the Commission is subject to
delay due to heightened security
precautions. Comments that do not
contain any nonpublic information may
instead be filed in electronic form as
part of or as an attachment to e-mail
messages directed to the following email box: consentagreement@ftc.gov.
The FTC Act and other laws the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. All timely and responsive
public comments, whether filed in
paper or electronic form, will be
considered by the Commission, and will
be available to the public on the FTC
Web site, to the extent practicable, at
https://www.ftc.gov. As a matter of
discretion, the FTC makes every effort to
remove home contact information for
individuals from the public comments it
receives before placing those comments
on the FTC Web site. More information,
including routine uses permitted by the
Privacy Act, may be found in the FTC’s
privacy policy, at https://www.ftc.gov/
ftc/privacy.htm.
FOR FURTHER INFORMATION CONTACT:
David K. Koehler (202–326–3627) or
Carl H. Settlemyer (202–326–2019),
Bureau of Consumer Protection, 600
Pennsylvania Avenue, NW.,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and Section 2.34 of the
Commission Rules of Practice, 16 CFR
2.34, notice is hereby given that the
above-captioned consent agreement
containing a consent order to cease and
desist, having been filed with and
accepted, subject to final approval, by
the Commission, has been placed on the
public record for a period of thirty (30)
days. The following Analysis to Aid
Public Comment describes the terms of
the consent agreement, and the
allegations in the complaint. An
electronic copy of the full text of the
consent agreement package can be
1 The comment must be accompanied by an
explicit request for confidential treatment,
including the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record.
The request will be granted or denied by the
Commission’s General Counsel, consistent with
applicable law and the public interest. See
Commission Rule 4.9(c), 16 CFR 4.9(c).
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Jkt 211001
obtained from the FTC Home Page (for
November 3, 2006), on the World Wide
Web, at https://www.ftc.gov/os/2006/11/
index.htm. A paper copy can be
obtained from the FTC Public Reference
Room, Room 130–H, 600 Pennsylvania
Avenue, NW., Washington, DC 20580,
either in person or by calling (202) 326–
2222.
Public comments are invited, and may
be filed with the Commission in either
paper or electronic form. All comments
should be filed as prescribed in the
ADDRESSES section above, and must be
received on or before the date specified
in the DATES section.
Analysis of Agreement Containing
Consent Order To Aid Public Comment
The Federal Trade Commission has
accepted, subject to final approval, an
agreement containing a consent order
from proposed respondents Zango, Inc.,
formerly known as 180solutions, Inc.
and Keith Smith and Daniel Todd,
individually and as officers of Zango,
Inc. (together ‘‘Respondents’’). The
proposed consent order has been placed
on the public record for thirty (30) days
for receipt of comments by interested
persons. Comments received during this
period will become part of the public
record. After thirty (30) days, the
Commission will again review the
agreement and the comments received,
and will decide whether it should
withdraw from the agreement or make
final the agreement’s proposed order.
General Allegations
Respondents develop, market, and
distribute via Internet downloads
advertising software programs
(‘‘adware’’)—including programs with
the names n-CASE, 180search Assistant,
Seekmo, and Zango—that monitor
consumers’ Internet use in order to
display targeted pop-up ads. This matter
concerns allegations that Respondents:
(1) Via a network of numerous affiliates
and sub-affiliates installed their adware
on consumers’ computers without
adequate notice or consent; and (2)
made their adware difficult for
consumers to identify, locate, and
remove.
The Commission’s complaint alleges
that from at least 2002 through 2005, the
primary way Respondents distributed
their adware was through a network of
affiliates. These affiliates often recruited
large numbers of third-party subaffiliates who purported to offer,
generally for free, some content to the
public, such as Internet browser
upgrades, utilities, games, screensavers,
peer-to-peer file sharing software and/or
entertainment content (hereinafter
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65823
‘‘lureware’’) and bundled the adware
with that content.
The Commission’s complaint further
alleges that consumers often have been
unaware that Respondents’ adware
would be installed on their computers
because it was not adequately disclosed
to them that downloading the lureware
would result in installation of
Respondents’ adware. In some
instances, no reference to the adware
was made on websites offering the
lureware or in the install windows. In
others, information regarding the
adware was available only by clicking
on inconspicuous hyperlinks contained
in the install windows or in lengthy
terms and conditions regarding the
lureware. Often the existence and
information about the effects of
Respondents’ adware could only be
ascertained, if at all, by clicking through
multiple inconspicuous hyperlinks.
Other affiliates and sub-affiliates used
security exploits and drive-by
downloads to bypass consumer notice
and consent completely. The complaint
alleges that Respondents knew or
should have known of their affiliates’
and sub-affiliates’ widespread failure to
provide adequate notice of their adware
and obtain consumer consent to its
installation.
The Commission’s complaint further
alleges that Respondents, until at least
mid-2005, made identifying, locating,
and removing their adware extremely
difficult for consumers. Among other
things, Respondents: installed code on
consumers’ computers that would
enable their adware to be reinstalled
silently after consumers attempted to
uninstall or remove it; failed to identify
adequately the name or source of the
adware in pop-up ads so as to enable
consumers to locate the adware on their
computers; named adware files or
processes with names resembling core
systems software or applications and
placing files in a variety of locations;
listed the adware in the Windows Add/
Remove utility under names intended
and/or likely to confuse consumers;
required consumers to have a live
Internet connection and download
additional software from Respondents to
uninstall the adware; represented to
consumers that the adware did not show
pop-up ads and/or exaggerated the
consequences of uninstalling the
adware; provided uninstall tools that
failed to uninstall the adware in whole
or part; and/or reinstalled the adware
files on consumers’ computers with
randomly generated names to avoid
further detection and removal.
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Federal Register / Vol. 71, No. 217 / Thursday, November 9, 2006 / Notices
Deception Allegation
The Commission’s complaint alleges
that by offering content over the Internet
such as browser upgrades, utilities,
games, screensavers, peer-to-peer file
sharing software and/or entertainment
content, without disclosing adequately
that this content was bundled with
Respondents’ adware, Respondents
committed a deceptive practice. The
bundling of Respondents’ adware,
which monitors their Internet use and
causes them to receive pop-up
advertisements, would be material to
consumers in their decision whether to
download the other software programs
and/or content.
Unfairness Allegations
The Commission’s complaint also
alleges that it was an unfair practice for
Respondents to install on consumers’
computers, without their knowledge or
authorization, adware that could not be
reasonably identified, located, or
removed by consumers. In addition, the
complaint alleges that it was an unfair
practice, in and of itself, for
Respondents not to provide consumers
with a reasonable means to identify,
locate, and remove Respondents’
adware from their computers. The
complaint further alleges that these
practices have caused or are likely to
cause substantial consumer injury by
requiring consumers to spend
substantial time and/or money to locate
and remove this adware from their
computers. The injury to consumers was
neither reasonably avoided by the
consumers themselves, nor outweighed
by countervailing benefits to consumers
or competition.
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The Proposed Consent Order
The proposed consent order contains
provisions designed to prevent
Respondents from engaging in similar
acts and practices in the future and to
halt continuing harm caused by
Respondents’ prior unlawful practices.
Part I of the proposed order prohibits
Respondents from contacting any
consumer’s computer, to display ads or
otherwise, if their adware was installed
on that computer before January 1, 2006.
Parts II and III prohibit Respondents
from, or assisting others in, installing
software onto any computer by
exploiting security vulnerabilities or
failing to give adequate notice to
consumers, or installing any software
program or application without express
consent. ‘‘Express consent’’ is defined in
the proposed order to require clear and
prominent disclosure of material terms
prior to and separate from any end user
license agreement, and consumer
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Jkt 211001
activation of the download or
installation via clicking a button or a
substantially similar action.
Part IV requires Respondents to
establish, implement, and maintain a
clearly disclosed, user-friendly
mechanism through which consumers
can report and Respondents can timely
address complaints regarding
Respondents’ practices.
Part V requires Respondents to
establish, implement, and maintain a
comprehensive program that is
reasonably designed to require affiliates
to obtain express consent before
installing Respondents’ software onto
consumers’ computers. Part V also
contains sub-parts mandating certain
measures Respondents must take to
monitor their distribution network.
Part VI requires Respondents to
identify advertisements served via
Respondents’ adware in order for
consumers to easily locate the source of
the advertisement, easily access
Respondents’ complaint mechanism,
and access directions on how to
uninstall such adware.
Part VII requires Respondents to
provide reasonable and effective means
for consumers to uninstall Respondents’
adware.
Part IX requires Respondents to pay
$3 million to the Commission over the
course of a year. In the discretion of the
Commission, these funds may be used
to provide such relief as it determines
to be reasonably related to Respondents’
practices alleged in the complaint, and
to pay any attendant administrative
costs. Such relief may include the
rescission of contracts, payment of
damages, and/or public notification
respecting such unfair or deceptive
practices. If the Commission
determines, in its sole discretion, that
such relief is wholly or partially
impractical, any funds not used shall be
paid to the U.S. Treasury.
Part X requires Respondents to
cooperate with the Commission in this
action or any subsequent investigations
related to or associated with the
transactions or the occurrences that are
the subject of the Complaint.
The remaining order provisions
govern record retention (Part VIII), order
distribution (Part XI), ongoing reporting
requirements (Parts XII and XIII), and
filing a compliance report (Part XIV).
Part XV provides that the order will
terminate after twenty (20) years under
certain circumstances.
The purpose of this analysis is to
facilitate public comment on the
proposed order, and it is not intended
to constitute an official interpretation of
the agreement and proposed order or to
modify in any way their terms.
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Fmt 4703
Sfmt 4703
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E6–18912 Filed 11–8–06; 8:45 am]
BILLING CODE 6750–01–P
FEDERAL TRADE COMMISSION
No FEAR Act Notice
AGENCY:
Federal Trade Commission
(FTC).
ACTION:
Notice.
SUMMARY: The Federal Trade
Commission (FTC) is providing notice
to its employees, former employees, and
applicants for Federal employment
about the rights and remedies available
to them under the Federal
antidiscrimination, whistleblower
protection, and retaliation laws. This
notice fulfills the FTC’s initial
notification obligation under the
Notification and Federal Employees
Antidiscrimination and Retaliation Act
(No FEAR Act), as implemented by
Office of Personnel Management (OPM)
regulations at 5 CFR part 724.
FOR FURTHER INFORMATION CONTACT:
Barbara Wiggs, Director, Office of Equal
Employment Opportunity (EEO), by
mail at Federal Trade Commission, Mail
Drop H–413, 600 Pennsylvania Avenue,
NW., Washington, DC 20580, or by
telephone at (202) 326–2197. Additional
information can be found on the FTC’s
Web site at https://www.ftc.gov.
SUPPLEMENTARY INFORMATION: On May
15, 2002, Congress enacted the
‘‘Notification and Federal Employee
Antidiscrimination and Retaliation Act
of 2002,’’ which is now known as the
No FEAR Act. See Pub. L. 107–174,
codified at 5 U.S.C. 2301 note. As stated
in the full title of the Act, the Act is
intended to ‘‘require that Federal
agencies be accountable for violations of
antidiscrimination and whistleblower
protection laws.’’ In support of this
purpose, Congress found that ‘‘agencies
cannot be run effectively if those
agencies practice or tolerate
discrimination.’’ Pub. L. 107–174,
section 101(1).
The Act also requires this agency to
provide this notice to its Federal
employees, former Federal employees
and applicants for Federal employment
to inform you of the rights and
protections available to you under
Federal antidiscrimination,
whistleblower protection, and
retaliation laws.
Antidiscrimination Laws
A Federal agency cannot discriminate
against an employee or applicant with
E:\FR\FM\09NON1.SGM
09NON1
Agencies
[Federal Register Volume 71, Number 217 (Thursday, November 9, 2006)]
[Notices]
[Pages 65822-65824]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-18912]
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 052 3130]
Zango, Inc., Formerly Kown as 180solutions, Inc.; Analysis of
Proposed Consent Order to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before December 5, 2006.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``Zango, Inc., File No. 052 3130,'' to
facilitate the organization of comments. A comment filed in paper form
should include this reference both in the text and on the envelope, and
should be mailed or delivered to the following address: Federal Trade
Commission/Office of the Secretary, Room 135-H, 600 Pennsylvania
Avenue, NW., Washington, DC 20580. Comments containing confidential
material must be
[[Page 65823]]
filed in paper form, must be clearly labeled ``Confidential,'' and must
comply with Commission Rule 4.9(c). 16 CFR 4.9(c) (2005).\1\ The FTC is
requesting that any comment filed in paper form be sent by courier or
overnight service, if possible, because U.S. postal mail in the
Washington area and at the Commission is subject to delay due to
heightened security precautions. Comments that do not contain any
nonpublic information may instead be filed in electronic form as part
of or as an attachment to e-mail messages directed to the following e-
mail box: consentagreement@ftc.gov.
---------------------------------------------------------------------------
\1\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See Commission Rule 4.9(c),
16 CFR 4.9(c).
---------------------------------------------------------------------------
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at https://www.ftc.gov. As a matter of discretion, the FTC
makes every effort to remove home contact information for individuals
from the public comments it receives before placing those comments on
the FTC Web site. More information, including routine uses permitted by
the Privacy Act, may be found in the FTC's privacy policy, at https://
www.ftc.gov/ftc/privacy.htm.
FOR FURTHER INFORMATION CONTACT: David K. Koehler (202-326-3627) or
Carl H. Settlemyer (202-326-2019), Bureau of Consumer Protection, 600
Pennsylvania Avenue, NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Section 2.34
of the Commission Rules of Practice, 16 CFR 2.34, notice is hereby
given that the above-captioned consent agreement containing a consent
order to cease and desist, having been filed with and accepted, subject
to final approval, by the Commission, has been placed on the public
record for a period of thirty (30) days. The following Analysis to Aid
Public Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for November 3, 2006), on the World Wide Web, at https://www.ftc.gov/
os/2006/11/index.htm. A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington,
DC 20580, either in person or by calling (202) 326-2222.
Public comments are invited, and may be filed with the Commission
in either paper or electronic form. All comments should be filed as
prescribed in the ADDRESSES section above, and must be received on or
before the date specified in the DATES section.
Analysis of Agreement Containing Consent Order To Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, an agreement containing a consent order from proposed
respondents Zango, Inc., formerly known as 180solutions, Inc. and Keith
Smith and Daniel Todd, individually and as officers of Zango, Inc.
(together ``Respondents''). The proposed consent order has been placed
on the public record for thirty (30) days for receipt of comments by
interested persons. Comments received during this period will become
part of the public record. After thirty (30) days, the Commission will
again review the agreement and the comments received, and will decide
whether it should withdraw from the agreement or make final the
agreement's proposed order.
General Allegations
Respondents develop, market, and distribute via Internet downloads
advertising software programs (``adware'')--including programs with the
names n-CASE, 180search Assistant, Seekmo, and Zango--that monitor
consumers' Internet use in order to display targeted pop-up ads. This
matter concerns allegations that Respondents: (1) Via a network of
numerous affiliates and sub-affiliates installed their adware on
consumers' computers without adequate notice or consent; and (2) made
their adware difficult for consumers to identify, locate, and remove.
The Commission's complaint alleges that from at least 2002 through
2005, the primary way Respondents distributed their adware was through
a network of affiliates. These affiliates often recruited large numbers
of third-party sub-affiliates who purported to offer, generally for
free, some content to the public, such as Internet browser upgrades,
utilities, games, screensavers, peer-to-peer file sharing software and/
or entertainment content (hereinafter ``lureware'') and bundled the
adware with that content.
The Commission's complaint further alleges that consumers often
have been unaware that Respondents' adware would be installed on their
computers because it was not adequately disclosed to them that
downloading the lureware would result in installation of Respondents'
adware. In some instances, no reference to the adware was made on
websites offering the lureware or in the install windows. In others,
information regarding the adware was available only by clicking on
inconspicuous hyperlinks contained in the install windows or in lengthy
terms and conditions regarding the lureware. Often the existence and
information about the effects of Respondents' adware could only be
ascertained, if at all, by clicking through multiple inconspicuous
hyperlinks. Other affiliates and sub-affiliates used security exploits
and drive-by downloads to bypass consumer notice and consent
completely. The complaint alleges that Respondents knew or should have
known of their affiliates' and sub-affiliates' widespread failure to
provide adequate notice of their adware and obtain consumer consent to
its installation.
The Commission's complaint further alleges that Respondents, until
at least mid-2005, made identifying, locating, and removing their
adware extremely difficult for consumers. Among other things,
Respondents: installed code on consumers' computers that would enable
their adware to be reinstalled silently after consumers attempted to
uninstall or remove it; failed to identify adequately the name or
source of the adware in pop-up ads so as to enable consumers to locate
the adware on their computers; named adware files or processes with
names resembling core systems software or applications and placing
files in a variety of locations; listed the adware in the Windows Add/
Remove utility under names intended and/or likely to confuse consumers;
required consumers to have a live Internet connection and download
additional software from Respondents to uninstall the adware;
represented to consumers that the adware did not show pop-up ads and/or
exaggerated the consequences of uninstalling the adware; provided
uninstall tools that failed to uninstall the adware in whole or part;
and/or reinstalled the adware files on consumers' computers with
randomly generated names to avoid further detection and removal.
[[Page 65824]]
Deception Allegation
The Commission's complaint alleges that by offering content over
the Internet such as browser upgrades, utilities, games, screensavers,
peer-to-peer file sharing software and/or entertainment content,
without disclosing adequately that this content was bundled with
Respondents' adware, Respondents committed a deceptive practice. The
bundling of Respondents' adware, which monitors their Internet use and
causes them to receive pop-up advertisements, would be material to
consumers in their decision whether to download the other software
programs and/or content.
Unfairness Allegations
The Commission's complaint also alleges that it was an unfair
practice for Respondents to install on consumers' computers, without
their knowledge or authorization, adware that could not be reasonably
identified, located, or removed by consumers. In addition, the
complaint alleges that it was an unfair practice, in and of itself, for
Respondents not to provide consumers with a reasonable means to
identify, locate, and remove Respondents' adware from their computers.
The complaint further alleges that these practices have caused or are
likely to cause substantial consumer injury by requiring consumers to
spend substantial time and/or money to locate and remove this adware
from their computers. The injury to consumers was neither reasonably
avoided by the consumers themselves, nor outweighed by countervailing
benefits to consumers or competition.
The Proposed Consent Order
The proposed consent order contains provisions designed to prevent
Respondents from engaging in similar acts and practices in the future
and to halt continuing harm caused by Respondents' prior unlawful
practices. Part I of the proposed order prohibits Respondents from
contacting any consumer's computer, to display ads or otherwise, if
their adware was installed on that computer before January 1, 2006.
Parts II and III prohibit Respondents from, or assisting others in,
installing software onto any computer by exploiting security
vulnerabilities or failing to give adequate notice to consumers, or
installing any software program or application without express consent.
``Express consent'' is defined in the proposed order to require clear
and prominent disclosure of material terms prior to and separate from
any end user license agreement, and consumer activation of the download
or installation via clicking a button or a substantially similar
action.
Part IV requires Respondents to establish, implement, and maintain
a clearly disclosed, user-friendly mechanism through which consumers
can report and Respondents can timely address complaints regarding
Respondents' practices.
Part V requires Respondents to establish, implement, and maintain a
comprehensive program that is reasonably designed to require affiliates
to obtain express consent before installing Respondents' software onto
consumers' computers. Part V also contains sub-parts mandating certain
measures Respondents must take to monitor their distribution network.
Part VI requires Respondents to identify advertisements served via
Respondents' adware in order for consumers to easily locate the source
of the advertisement, easily access Respondents' complaint mechanism,
and access directions on how to uninstall such adware.
Part VII requires Respondents to provide reasonable and effective
means for consumers to uninstall Respondents' adware.
Part IX requires Respondents to pay $3 million to the Commission
over the course of a year. In the discretion of the Commission, these
funds may be used to provide such relief as it determines to be
reasonably related to Respondents' practices alleged in the complaint,
and to pay any attendant administrative costs. Such relief may include
the rescission of contracts, payment of damages, and/or public
notification respecting such unfair or deceptive practices. If the
Commission determines, in its sole discretion, that such relief is
wholly or partially impractical, any funds not used shall be paid to
the U.S. Treasury.
Part X requires Respondents to cooperate with the Commission in
this action or any subsequent investigations related to or associated
with the transactions or the occurrences that are the subject of the
Complaint.
The remaining order provisions govern record retention (Part VIII),
order distribution (Part XI), ongoing reporting requirements (Parts XII
and XIII), and filing a compliance report (Part XIV). Part XV provides
that the order will terminate after twenty (20) years under certain
circumstances.
The purpose of this analysis is to facilitate public comment on the
proposed order, and it is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way their terms.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. E6-18912 Filed 11-8-06; 8:45 am]
BILLING CODE 6750-01-P