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Industry insiders contacted me about CNET Network's potential legal exposure to Adware/Spyware following Eliot Spitzer's suit against Intermix (ticker: MIX) and the Internet Stock Blog's discussion of stocks at risk from Spitzer's attack on Adware. Key points from the conversations:

  • CNET's Download.com is its largest individual web site.
  • Revenue streams: page-view driven advertising and payments from software vendors, perhaps on a per-download basis.
  • Sources say (I haven't corroborated this): Download.com was one of the largest distributors of Kazaa, file-sharing software that was bundled with increasing amounts of Adware and Spyware.
  • Is it possible that CNET didn't know about the Adware/Spyware bundled with programs on Download.com? Unlikely. The programs were bloated, and some insiders think that CNET was paid on a per-download basis. How else would these programs generate profits if not from Adware/Spyware?
  • Could CNET have had a cleaner Adware policy? Certainly. Elliot Noss, CEO of competitor Tucows, which has the second largest download site after Download.com, claims that:
"It is [and was] our policy (published in the ratings guide) not to accept software that we deem to be intrusive adware: This type of software installs data mining programs or third-party adware modules, usually identified as third-party adware. In other words, we do not accept spyware, and we reject some forms of adware."

IMPORTANT NOTE: CNET NETWORKS HAS RESPONDED TO THIS POST HERE.

CNET chart below.
Big_10

Full disclosure: at the time of writing I'm short CNET.

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Source: CNET's exposure to Spitzer's attack on Adware: more details