TELECOM Digest OnLine - Sorted: Intermix Media Settles Lawsuit With Sptizer, NY Attorney General

Intermix Media Settles Lawsuit With Sptizer, NY Attorney General

Lisa Minter (
Wed, 15 Jun 2005 09:51:42 -0500

Company settles 'spyware' lawsuit for $7.5 mln

Intermix Media Inc. has agreed to pay the state of New York $7.5
million to settle a lawsuit charging it with bundling hidden "spyware"
along with millions of programs it gave away for free, the company
said on Tuesday.

The company also said it would permanently discontinue distribution of
its adware, redirect and tool bar programs, all of which Intermix
noted it has previously stopped distributing. Intermix said it did not
admit any wrongdoing or liability.

Intermix shares rose $1.50, or 24.6 percent, to $7.60 in after-hours
trading on Inet following the news.

The settlement deal follows New York Attorney General Eliot Spitzer's
April lawsuit charging that the company's practice of bundling hidden
spyware violated state laws prohibiting false advertising and
deceptive business practices.

It also came as the company on Tuesday posted a fourth quarter net
loss of $409,000 compared with a loss of $4.4 million a year
ago. Revenue rose to $24.1 million from $14.4 million, boosted by
gains at its Alena business unit and network segment.

The results also reflected a gain of $6.3 million related to an
investment in its newly-formed, majority-owned subsidiary MySpace
Inc. and a $6.9 million reserve established in connection with
Spitzer's lawsuit, Intermix said.

Spitzer's office had sought to stop Los Angeles-based Intermix from
secretly installing software on users' computers, make it return money
it made from the process and pay a fine.

These programs were secretly bundled with others designed to deliver
pop-up advertising or steer Web traffic to an Intermix search engine,
Spitzer charged in the lawsuit.

Under terms of the settlement, Intermix agreed to pay $7.5 million to
the state over three years. Since Spitzer's initial inquiry, Intermix
also said it has created the position of chief privacy officer and
worked with federal regulators to help protect Internet consumers.

Copyright 2005 Reuters Limited.

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