MS, Claria Buyout Talk Sparks Concern

Microsoft is reportedly eyeing yet another acquisition, but this buyout may prove to be a lot more controversial. Redmond is in talks to buy Claria, the company that is behind the adware program Gator, which has been criticized for its actions in serving unwanted pop-ups and tracking Web usage.

According to press reports, the most recent offer by Microsoft was $500 million; however, the negotiations may break off before a deal can be made. There are fears that such a deal may send the wrong message to consumers, as Microsoft's own anti-spyware program detects Claria software as "high risk" and recommends deletion.

However, others at Microsoft see the acquisition as a way to clean up the adware industry by taking out one of its biggest offenders and using the technology in more acceptable ways.

Joe Wilcox, senior analyst at Jupiter Research thinks such a deal is unlikely. "Microsoft is fairly sensitive about 'Big Brother' accusations, enacts a strict (and I mean strict privacy policy) and operates under a FTC settlement related to privacy issues," Wilcox wrote on Microsoft Monitor Thursday. "So, appearances would be an important consideration in any possible Claria acquisition."


Wilcox does admit, however, that an acquisition could make sense following recent moves made by Google. "With so much of MSN's revenue coming from paid search and so much corporate concern about Google, it makes sense Microsoft would look for ways to further extend its online advertising capabilities, including more personalization."

Neither Microsoft nor Claria are commenting on the situation.

While Claria is infamous for its Gator adware, in recent months the company has begun an attempt to clean up its act. Claria is now working on software that offers personalized services and tools to let Web developers create customizable sites.

According to the New York Times, Claria had approached Microsoft about using some of its technology. That technology must have interested Microsoft CEO Steve Ballmer; according to the source, Ballmer gave the approval to begin buyout talks earlier this month.

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