Hotbar, 180solutions Merge Adware

By Nate Mook, BetaNews

June 7, 2006, 12:41 PM

Adware companies Hotbar and 180solutions have merged their businesses into a new company that will be known as "Zango," which is the name for 180solutions' primary advertising software product it bundles in third party downloads.

The companies say Zango, which usually comes with online games and music, and Hotbar will continue to be offered as is. Hotbar enables users to change their Internet Explorer and Outlook toolbar, and adds links to Hotbar services and downloads. Both products are considered risky adware by security vendors.

"The merger creates increased available inventory and an even larger audience of potential customers whom advertisers can target utilizing Zango's time-shifted ad-delivery model," the companies said in the announcement. Terms of the deal were not disclosed, but Hotbar was rumored to be shopping itself around for $52 million.

Both Hotbar and 180solutions have been struggling to keep revenues up amid a crackdown on spyware and more educated consumers becoming wary about the software installed on their PCs.

180solutions sued ZoneLabs at the end of last year for being labeled as spyware, and later promised to clean up its act. The case was eventually dropped, but 180solutions was heavily criticized for allowing third parties to install its software without specific acknowledgment from end users.

Symantec, meanwhile, proactively sued Hotbar a year ago to assert its right to detect and remove the toolbar add-on from customers' computers.

"The deal, which was said to be primarily the assumption of Hotbar's debt, was perhaps an opportunity to give 180Solutions a hedge against its changing business model, with rapidly declining install rates as a result of no longer distributing through IST and the company’s decision to drop third party affiliate networks (by late Q1, 180’s daily revenue had reportedly dropped to approximately $75k a day, whereas a year ago that number was closer to $200k per day)," commented Sunbelt Software CEO Alex Eckelberry.

To their defense, the two companies say their products have attracted millions of users, and fulfill "consumers' growing demand for free, sought- after online videos, games, music, tools and utilities."