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End of desktop adware market

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Updated Controversial adware firm Zango has Zangone.

The adware maker was forced to pull down the shutters on its business after it was left unable to service its debts. Initially we, along with othe news outlets, incorrectly reported that video search engine firm Blinkx had acquired Zango. In fact Blinkx has only bought a proportion of its assets from administrators.

"The bank foreclosed on Zango and Blinkx purchased some technical assets from the bank, including some IP and hardware, which constituted about 10 per cent of Zango's total assets," a Blinkx spokeswoman explained.

Zango's closure effectively sounds the death knell of a controversial business model.

Zango began life as 180 Solutions, raising $40m from Spectrum Equity Investors in 2004 and growing to employ more than 230 workers at its peak. Accusations of deceptive installation practices and problems in removing its software once installed led to a lawsuit by US consumer watchdog the Federal Trade Commission.

Zango settled the lawsuit in November 2006, agreeing to pay a fine of $3m without formally admitting guilt. The firm said that its problems were due to rogue affiliates, who it was in the process of culling even before the FTC lawsuit.

The controversy didn't die there, with Zango repeatedly forced to defend itself against accusations that it installed its ad-serving software on PCs without the consent of users.

Security researchers Ben Edelman, an assistant professor at the Harvard Business School, and Chris Boyd, of Facetime Security, continued to document evidence of malpractice. Zango consistently denied any wrongdoing.

Security firms routinely labeled Zango's software as adware, or at least potentially unwanted. Zango's separate attempts to sue Kaspersky Lab and PC Tools over such listings both failed in 2007.

Last year the firm was forced to lay off 118 of its then 200-strong workforce in two tranches, as it focused on a new product called Platrium. This involved receiving ads in exchange for playing online games. That venture looks to be history, along with support and development for Zango's existing products, the Hotbar toolbar and Seekmo, an adware program users need to install to play premium content.

The end-game for Zango marks the end of the controversial adware business model. Other well known names in the field - including Claria (Gator), WhenU and DirectRevenue - ceased operations some time ago, leaving Zango as the last man standing.

A blog posting by Zango co-founder and former chief technology officer Ken Smith laments that Zango finished its life with a "fire sale". His posting provides an insider's view on a failed business endeavour and is well worth a read. ®

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