The dispute between Google and its “bad apples” involves technical details but, fundamentally, it’s about crummy products designed to force feed ads.

In the case of AVG, it worked like this: when people downloaded its free security software, they automatically received a “safe search” product (unless they were alert enough to uncheck a box during the download process). The unwanted product then installed itself on their browser toolbars as a default search engine. It also — and this is the critical part — served as a platform for AVG to collect money by showing ads, and proved about as easy to uninstall as resigning from the French Foreign Legion.

Veteran tech writer Emil Protalinski was first to report AVG’s hijinks last summer, calling it the “worst foistware I’ve ever seen.” Since then, investor site Seeking Alpha warned that AVG’s aggressive tactics to get ad revenue would lead Google, which supplies ads to AVG through its AdSense program, to take action. The search giant apparently decided it could do without AVG and, in its new policy announcement, explained:

For example, in the last 90 days, we have seen over 100,000 complaints about software that changed users’ browser settings or about toolbars that they couldn’t uninstall.  We want to avoid these kinds of bad user experiences.

Seeking Alpha also warned that if Google jilted AVG, the site would be forced to live on Yahoo ad revenue — which would bring in less money. This prospect appears to have had its intended effect on AVG.

The outgoing CEO of AVG, JR Smith, explained in a Monday phone interview that its “safe search” product was no longer bundled in a way that forced consumers to opt out. He added that AVG recently signed a new two-year deal with Google and said it complied with all the company’s conditions.

“They’ll send you default letters and kick you off the network,” said Smith, adding that Google takes tough lines to promote a clean ad ecosystem.

Google, in response to a request for comment, only repeated its policy announcement. Yahoo did not respond at all.

Tough line or just tip of the iceberg?

Google’s new policy aims to reign in AVG-style tactics by forcing software that uses its ad services to provide “one-click uninstall” and to go through a Google approval process. In the bigger picture, the policy appears to be part of a bigger effort by Google to clean up scammy ad practices involving toolbars.

While toolbars have legitimate uses, they can also be a vehicle for mischief. In addition to AVG, other public companies like Babylon have acquired a reputation for malware; the latter offers a translation program but the installation process can also lead to browser hijacking. Some techniques are even more nasty.

Certain scams typically invite users to download a program like “Find out who unfriended you on Facebook” but really serve to inject unauthorized ads. One example is Sambreel, a notorious ad outfit that forced its way onto the webpages of the New York Times and other prominent publishers last year; the hijacked ad space likely cost the Times and others millions in lost revenues. Even Google itself has been a victim through its YouTube video site.

An executive at a major publisher forwarded new screenshots this month like the one below which shows how a “Browse to Save” toolbar device (which claims to find deals for shoppers as they search the web) has used a Sambreel product to take over YouTube’s ads:

According to the executive, who did not want to be named, Google is doing the right thing but faces an uphill battle. While it can whip sites like AVG into line, unlike companies, sleazy actors will simply shop around for another ad exchange to do the dirty work. He said that some exchanges — which act as trading houses for digital ad inventory — often turn a blind eye to bad advertisers so long as they bring in money. In this bigger picture, Google appears to be trying to raise the bar in the industry in order to prevent a crisis of confidence in the online ads that are its lifeblood.

The toolbar policy comes at a critical juncture for the online display ad industry. On one hand, the industry recently suffered another black eye from a botnet scandal and may also be losing ground to the current mania for native advertising. On the other hand, Google, AOL, Facebook and others are developing a sophisticated suite of programmatic ad tools that could make the industry more efficient than ever before.

(Image by  BMJ via Shutterstock)

In a ruling issued Thursday in San Diego, U.S. District Judge Cathy Ann Bencivengo dismissed an antitrust complaint filed by Sambreel, a controversial advertising company that offers products with names like PageRage that let users tweak the look of their Facebook page.

“We are pleased by the decision,” said Facebook’s lead counsel, Craig Clark, in an email statement. Sambreel’s lawyers did not immediately respond to a request for comment.

The companies got in a bitter fight earlier this year after Facebook “gated” users who had downloaded the Sambreel products — meaning the users had to remove PageRage software before they could log on to the social network. Sambreel responded with an aggressive legal and public relations campaign, arguing that Facebook broke antitrust laws. Judge Bencivengo, however, was having none of this:

The company, Sambreel Holdings, first made news a year ago for hijacking ads on Google and Facebook. Its aggressive tactics drain revenue from the companies and confuse consumers, many of whom are unaware when Sambreel installs itself on their computer. And now the company is spreading quickly and threatening to cause havoc in the online ad market.

How it works

Sambreel, on the surface, offers programs with names like Page Rage or Drop Down Deals that promise to improve consumers’ web surfing experience by customizing web pages or providing special deals. The real purpose of these programs, however, is to serve as vehicles for injecting adware that replaces publishers’ ads with those served by Sambreel.

The result is that consumers see pages like the ones shown below. In the first example, Sambreel has pushed a premium Louis Vuitton ad further down the New York Times homepage and replaced it with an ad for something called “Pickle.” In the second, a prime CNN ad has been replaced by an ad served by a Sambreel browser extension called BuzzDock (a New York publishing executive showed us the takeover ads in action and supplied the screenshots):

The publishing executive, who did not wish to be identified, said that Sambreel’s activities are rattling the online ad industry. In particular, he said, the injected ads deprive publishers of revenue while also distorting prices. For example, a brand may be pleasantly surprised that a YouTube ad that ordinarily costs $10 a click is now available for $3 (without realizing that Sambreel, not Google, gets the revenue).

New York Times spokesperson, Eileen Murphy, provided the following statement:

“Buzzdock’s adware technology alters the display of nytimes.com pages by inserting advertisements sold by Buzzdock directly onto those pages.  Buzzdock collects all of the revenue from these ads; The Times does not see a dime. This is a fundamentally unfair business practice that is predicated on manipulating the user experience of nytimes.com, and we are exploring how best to bring it to an end.”

How widespread?

The publishing executive claims that Sambreel’s activities are serious enough to have depressed his company’s most recent earnings result. But such claims are hard to verify since it’s not possible to tell how many computers contain the ad-serving software. Sambreel did not respond to requests for comment.

At first glance, it seems unlikely that Sambreel is pervasive enough to affect the ad industry. After all, how many people are going to download junky browser plug-ins? On the other hand, Sambreel’s reported use of underhanded tactics could mean it is indeed widespread.

In a lawsuit filed in September, for instance, rental car company Hertz claims that Sambreel is bundling its adware with Pokemon video games, meaning customers are often unaware the software is even there. The Hertz lawsuit, which accuses Sambreel of injecting competing offers right when a customer makes a reservation, cites Sambreel’s own figure that claim more than 20 million “users” and that its ”products generated 158 billion advertising impressions” in the last quarter of 2011.

The allegations that Sambreel uses trickery to invade users’ computers is backed by Ben Edelman, a computer expert at Harvard Business School. Edelman says the adware is coming in through various bundles, including “trinkets” like the programs that promises to let you see “who has viewed you on Facebook.” The end result is the same — the user gets a junky product and adware that makes the computer run slower.

How to stop it?

Sambreel may be disturbing but it’s hardly the first time someone has tried to hijack publishers’ ad revenue. As Edelman points out, it was a decade ago that publishers sued ad nuisance Gator for taking over banner ads (the cases settled out of court).

This time around, people are pointing fingers at not just Sambreel but also at ad exchanges like Rubicon. In general, these exchanges provide a useful service for publishers by finding real-time buyers for unsold ad inventory. But in the case of Sambreel, both Edelman and the publishing source say ad exchanges are turning a blind eye to the company’s unethical practices. Rubicon did not respond to an initial request for comment. (Update: In a Monday email, Rubicon wrote to that it  had previously terminated its relationship with Sambreel).

If the exchanges are complicit, they appear to breaching an ethical duty but not a legal one. That means that the publishers may have no choice but to sue Sambreel — which could prove a tall order.

The adware company has already adopted aggressive legal positions, including suing Facebook for antitrust last spring after the social network said it would ban any users who had Sambreel’s Page Rage on their machines. Facebook has moved to dismiss the suit, calling Sambreel a “parasitic free rider.”

Should publishers decide to join Hertz and sue Sambreel directly, they may have to find a creative way to do so. From a legal perspective, Sambreel is likely to argue that users can do what they like with their own computers — including stripping out ads. Hertz is trying to overcome this by invoking New Jersey business and computer security laws.

Ken Basin, an intellectual property attorney with Greenberg Glusker in LA, says publishers can invoke copyright or their terms of service to counter Sambreel. He also suggests that publishers should appeal the federal government to begin privacy inquiries into Sambreel.

(Image by cristovao via Shutterstock)

PageRage gained popularity after launching in 2008 but also angered the social network because its designs included advertisements that papered over Facebook’s own ads.

In a lawsuit filed this week in San Diego federal court, PageRage says Facebook broke anti-trust law by pressuring advertisers to stop using PageRage. The suit also accuses Facebook of locking out users until they they removed PageRage from their web browsers.

Facebook has a history of working with outside developers who provide custom features for its users. PageRage says the social network itself said the product was “great” in 2009.

But Facebook allegedly changed its tune when it realized that PageRage’s owner, Sambreel, was emerging as a competitor in market for display ad dollars:

More troubling from Facebook’s perspective, Sambreel had grown into a legitimate competitor in the sale of online display advertising impressions. During the second quarter of 2011, for example, Sambreel served nearly 89 billion display advertising impressions – trailing only Facebook and Yahoo! (NSDQ: YHOO) among internet publishers. [..] PageRage represented a particular threat to Facebook because it offered advertisers a low-cost alternative to purchasing advertisements from Facebook. Rather than compete with Sambreel on the merits, Facebook pursued an anticompetitive scheme designed to eliminate Sambreel as a competitive threat.

To crush the alleged threat, PageRage says Facebook refused to do business with any advertiser who worked with the would-be rival. It also began requiring users to remove ad-supported versions of PageRage before they could log-in to Facebook.

PageRage says it has since lost most of its revenue and been forced to lay off 124 people.

A Facebook spokesman said by email, “We believe this complaint is without merit and we will fight it vigorously.”

The company has also described PageRage as “adware” and included it on a warning list of programs: “that claim to give you special Facebook powers, but actually cover your News Feed and profile (timeline) with ads.”

Other reports have portrayed programs like PageRage as opportunistic advertising ventures.

A report in the Wall Street Journal (NSDQ: NWS) in December quoted lawyers who stated that the legal status of programs like PageRage is “murky.”

The timing of the lawsuit, which accuses Facebook of breaching California law and Sections 1 and 2 of the Sherman Act, may be strategic as the social network is gearing up for a reported $100 billion IPO.

Here’s a copy of the complaint:

Facebook Class Action