COMPREHENSIVE RESPONSE TO RECENT SHARE PRICE VOLATILITY
31 Mar 2014
A downloadable copy of this article can be found here
London, England and San Francisco, CA – 31 March 2014 – blinkx plc (“blinkx” or the “Company”) provides a detailed response and its perspective on a blog published about blinkx on 28 January 2014, (“the blog”), which contributed to the recent volatility in the Company’s share price.
blinkx strongly refuted the assertions made in the blog at the time it was published. Since then, the Company has completed a thorough investigation of these assertions, including:
- A comprehensive internal review of current procedures and processes across blinkx;
- An audit of the Company’s technology and processes by Kroll, the Global Leader in Risk Management; This audit was led by the Head of the Cyber Investigations and a former FBI Special Agent with extensive industry experience in online investigations, brand protection and internet traffic forensics;
- A legal review of the Company’s practices and commercial obligations by the law firm DLA Piper, LLP, as related to the FTC’s (Federal Trade Commission) enforcement actions. This review was performed by a Partner and former FTC investigator and included a proactive outreach to the FTC’s Division of Advertising Practices and Division of Enforcement, within the Bureau of Consumer Protection;
- An outreach to Harvard University to understand the University’s policies governing the non-academic research activities of faculty and potential conflicts of interest relating to the paid for publication and marketing of such financial research to institutional and retail investors; and,
- Engagement with relevant financial regulatory authorities to investigate the recent trading activity and volatility in the Company’s shares.
Through this publication, the Company expands upon the numerous factual errors in the blog, which follows the four primary sections contained in the blog. The Company has been able to confirm and verify that the blog contains materially misleading information, uses selective data, makes erroneous assumptions about current and past practices, and reflects either a fundamental misunderstanding of the online advertising ecosystem and economics or is a deliberate attempt to use partial, incorrect and misleading information to arrive at subjective and malformed conclusions.
As a publicly traded company in a rapidly changing industry, blinkx management and Board are acutely aware of their fiduciary duty to investors. To that end, blinkx has always welcomed an informed debate about the Company in which ideas are shared openly to help form investment decisions, and the Company would never seek to curtail such an important function played by commentators.
However, given the apparent errors and bias within the blog, the subsequent disclosures that still remain opaque particularly around potential sponsorship and the short position in blinkx stock built prior to the blog, the Company questions the motivations and transparency of both the blogger and the sponsors of his research, who may have made significant financial gains as a result of the adverse impact on blinkx’s share price. Included below is an unedited version of the blog alongside blinkx’s detailed response to each assertion advanced by the blogger.
Video and advertising conglomerate Blinkx tells investors its “strong performance” results from “strategic initiatives” and “expanding demand, content, and audiences.” Indeed, Blinkx recentlyclimbed past a $1.2 billion valuation. At first glance, it sounds like a great business. But looking more carefully, I see reason for grave doubts.
My concerns result in large part from the longstanding practices of two of Blinkx’s key acquisitions, Zango and AdOn. But concerns extend even to Blinkx’s namesake video site. In the following sections, I address each in turn. Specifically, I show ex-Zango adware still sneaking onto users’ computers and still defrauding advertisers. I show the ex-AdOn traffic broker still sending invisible, popup, and other tainted traffic. I show Blinkx’ namesake site , Blinkx.com, leading users through a maze of low-content pages, while charging advertisers for video ads systematically not visible to users.
blinkx has consistently represented that it is a B2B Tech-Media company with unique strengths in video, but that video is not the only thing blinkx does. Rather, the Company has a diversified set of digital advertising capabilities and integrates multiple online ad formats to move from selling ad units to ad campaigns. While video is the past, present and future of the Company, sufficient scale, scope and reach to compete effectively is a fundamental requirement to succeed in the online advertising industry. Virtually every step the Company has taken since its inception in 2004, when online video was still “buffering” has been to further this agenda, whereas the video and video advertising market did not go mainstream until years later. This has included significant investments in technology, products, people, processes and acquisitions. While aspects of the product lines the blogger highlights are integrated into our operations, the blogger combines unrelated past practices, such as those relating to Zango prior to acquisition of specified assets by blinkx, with erroneous inferences about our current practices in order to draw our business model into question and paint an unflattering picture of the Company. Each of the blogger’s assertions is discussed in detail below.
1. The Legacy Zango Business
In April 2009, Blinkx acquired a portion of Zango, a notorious adware vendor known for products that at various times included 180 Search Assistant, ePipo, Hotbar, Media Gateway, MossySky, n-Case, Pinball, Seekmo, SpamBlockerUtility, and more. Zango was best known for its deceptive and even nonconsensual installations—in write-ups from 2004 to 2008, I showed Zango installing through security exploits ( even after design updates purportedly preventing such installations by supposed rogue partners ), targeting kids and using misleading statements, euphemisms, and material omissions , installing via deceptive ActiveX popups , These and other practices attracted FTC attention, and in a November 2006 settlement , Zango promised to cease deceptive installations as well as provide corrective disclosures and pay a $3 million penalty.
It is important to understand that a) blinkx did not acquire Zango and b) the period referenced above not only pre-dates blinkx, but also refers to an era in the industry that underwent significant change after 2008. blinkx acquired specific assets of Zango out of a foreclosure sale from a consortium of banks on April 16, 2009. Concurrent with the asset acquisition, blinkx also hired a number of ex-Zango staff into the blinkx organization. Zango, like many other companies of its kind ran an innovative and highly successful online advertising business that used an ad-supported software distribution model, until lax oversight of rogue partners and related activities destroyed its business model. While some of the ad units may be seen as intrusive (as are TV ads, which interrupt the viewing experience), they do not violate any laws when presented appropriately with requisite disclosures. The entire content economy (TV, magazines, web sites, mobile apps, etc) is rooted in this fundamental principle, whereby the user watches ads in exchange for access to quality content. The ad-supported software business that blinkx runs today complies fully with industry standards and requirements for the distribution and monetization of desktop and mobile ad supported software and applications. The business further provides blinkx with an important test bed for new technology, distribution and ad units. Since the acquisition and integration of the ex-Zango assets, specific processes and procedures, particularly around consent, choice and uninstallation, have been significantly revamped in order to meet or exceed current industry standards. Current practices bear no relation to the ex-Zango practices that led to FTC action in 2006 that, incidentally, Zango largely remediated in the three years prior to blinkx’s acquisition of assets in 2009.
To address the most egregious assertions in this section of the blog, blinkx engaged outside Counsel represented by DLA Piper to proactively contact the FTC on behalf of the Company regarding blinkx’s ad-supported software business. We contacted both the Assistant Director of the Division of Advertising Practices in the Bureau of Consumer Protection and the Assistant Director of the Division of Enforcement in the Bureau of Consumer Protection, to determine whether any aspect of the former FTC Consent Order would carry over to blinkx.
The Division of Advertising Practices is charged with enforcing rules and regulations that relate to unfair or deceptive advertising and marketing practices. As a matter of policy, the FTC does not and will not, publicly or in writing, confirm or deny any ongoing or planned investigations. However, the Assistant Director of this Division communicated to our outside counsel that she was not aware of any application of the Zango Consent Order to blinkx and she indicated that blinkx was not the subject of any current investigation by her Division. In a subsequent conversation, she further indicated that none of blinkx or its subsidiaries was the subject of any current investigation by her Division.
The Division of Enforcement is responsible for enforcing all consent orders implemented by the Bureau of Consumer Protection, including the 2006 Consent Order with Zango. The Assistant Director of this Division communicated to our outside counsel that he was not aware of any enforcement actions regarding the Zango Consent Order, which means that the Division of Enforcement is not currently alleging that anyone is in violation of the Consent Order. He further stated that he believed the Zango consent order might not be “active” (or still valid) in light of Zango’s bankruptcy. Based on his understanding of blinkx’s purchase of select ex-Zango assets, he explained that he did not believe the Zango Consent Order would be applicable to blinkx, since blinkx would not be considered a legal successor to Zango.
The above establishes that blinkx rests assured that is not bound by the extraordinary measures leveled upon Zango by the FTC for past practices – validated by outside Counsel, rendering virtually the entire blog section pertaining to this entity null and void.
Few users would affirmatively request adware that shows extra pop-ups, so Blinkx and its distributors use deceptive tactics to sneak adware onto users’ computers. In a representative example, I ran a Google search for “Chrome” (Google’s well-known web browser), clicked an ad, and ended up at Youdownloaders.com—a site that bundles Chrome with third-party advertising software. (The Youdownloaders footer states “The installers are compliant with the original software manufacturer’s policies and terms & conditions” though it seems this claim is untrue: Chrome Terms of Service section 5.3 disallows copying and redistributing Chrome; 8.6 disallows use of Google’s trademarks in a way that is likely to cause confusion; 9.3 disallows transfer of rights in Chrome.) In my testing, the Youdownloaders installer presented offers for five different adware programs and other third-party applications, among them Weather Alerts from desktopweatheralerts.com. Installation video .
Ad supported and “freemium” options are valid, recognized and accepted alternatives for packaging and distributing premium content, including desktop and mobile applications, as is the development, use, packaging and distribution of freely distributed and open source software. A majority of the freely available online tools are ad-supported, including toolbars and browser plug-ins, for example. Youdownloaders is a third party distributor and is neither blinkx nor a blinkx affiliate. Rather, the Company appears to be distributing the Weather application (further referenced below), among others noted in the blog via a separate agreement with an approved distributor. Distributors of the Weather application are bound by specific Terms & Conditions of multiple parties, including blinkx, its distributor and publishers of the applications being distributed. blinkx internally monitors distribution partners to ensure Terms and Conditions are being met and if noncompliance is reported or discovered, any such violation of the distribution relationship is reviewed, cured or terminated.
I consider the Youdownloaders installation deceptive for at least four reasons: 1) A user’s request for free Chrome software is not a proper circumstance to tout adware. The user gets absolutely nothing in exchange for supposed “agreement” to receive the adware; Chrome is easily and widely available for free, without adware. It is particularly one-sided to install five separate adware apps—taking advantage of users who do not understand what they are asked to accept (including kids, non-native speakers, and those in a hurry). 2) On the Weather Alerts page of the installation, on-screen statements mention nothing of pop-up ads or, indeed, any advertising at all. In contrast, the FTC’s settlement with Zango requires that disclosure of advertising practices be “clear and prominent,” “unavoidable,” and separate from any license agreement—requirements not satisfied here. 3) The Youdownloaders user interface leads users to think that the bundled installations are compulsory. For example, the “decline” button (which lets a user reject each adware app) appears without the distinctive shape, outline, color, or font of an ordinary Windows button. 4) Users are asked to accept an objectively unreasonable volume of agreements and contracts, which in my testing include at least 14 different documents totaling 37,564 words (8.5 times the length of the US Constitution).
As already established, Youdownloaders in not blinkx or any blinkx affiliate. Therefore, the blogger’s assertions regarding this distributor have no bearing on blinkx. However, we can offer objective feedback to specific points made in the blog.
The above appears to be either an intentional or naive attempt to establish a perception of impropriety and discredit not only blinkx, but also the entire ad-supported industry. Perhaps most tellingly, the blogger neglects to point out that Chrome is itself ad-supported software distributed by Google. Like others using the ad-supported software distribution channel, blinkx through its partner bids on an (ad) slot for one of its products, just as it does many times daily on a host of search engines, display ad networks, exchanges, etc. blinkx neither dictates what (other) products Youdownloaders distributes nor controls how the distributor licenses or packages these products before presenting them to consumers, so long as blinkx terms and conditions are not violated.
Specifically, blinkx is not privy to any relationship between Youdownloaders and Google for distributing Chrome, which it would appear Google permits, just as it allows handset manufacturers to customize and distribute copies of its ad-supported Android software. It is true that Chrome is easily and widely available for free, without “adware” but, as mentioned above, the blogger fails to note that Chrome is itself an ad-supported product distributed to increase use of the Google’s search engine to display ads. It is quite likely that Youdownloaders may have a commercial relationship with Google and has spent significant time and resources to market its product set to drive users to install its package of software applications, using both SEO and SEM techniques, among others. This is neither misleading, nor illegal, it represents one of many competitive avenues that an end user chooses to find and install software applications of their choice. This is simply how marketing and advertising campaigns are executed in the real world.
It is also interesting to note that Google allows the purchase of the Ad word “chrome download” on google.com. Moreover, Google has among the industry’s most stringent relevancy guidelines for downloadable software, which it enforces with distributors like Youdownloaders. Details of advertising support for free software downloads are clearly listed in the terms and conditions, in line with industry standards, and the installation video within the blog clearly shows the link to these terms and conditions in the consent screen.
The blogger cites that there were 14 different documents, but does not provide any details either in his blog or his installation video that all such documents were for Weather Alerts. It is more than likely that since there are multiple applications being offered in the package, each individual software application has its own EULA (End User License Agreement), as mandated by the publisher of the software. Ultimately, the scope of user documentation presented is a matter for the owners of the applications being distributed, and the distributor – something outside of blinkx’s control in this example. In actuality, the terms and conditions of Weather Alerts are only 6,143 words in length (as measured using Microsoft Word). By comparison, the iTunes Terms and Conditions, which many users agree to, are 14,803 words in length (as measured using Microsoft Word). The entire construct presented in this section of the blog demonstrates a fundamental misunderstanding of the relationship between Youdownloaders, Google and blinkx, and indeed of the entire ad-supported software model in general.
Tellingly, Blinkx takes considerable steps to distance itself from these deceptive practices. For example, nothing on Blinkx’s site indicates that Weather Alerts is a Blinkx app or shows Blinkx ads. The Desktopweatheralerts.com site offers no name or address, even on its Contact Us form. Weather Alerts comes from a company called Local Weather LLC , an alter ego ofWeather Notifications LLC , both of Minneapolis MN, with no stated affiliation with Blinkx. Weather Notifications’ listed address is a one-bedroom one-bathroom apartment —hardly a standard corporate office. Nonetheless, multiple factors indicate to me that Desktop Weather Alerts
This section contains a series of factual errors that either deliberately mislead or exemplify superficial, uncorroborated research that any trained and accredited financial researcher or organization could have crosschecked using publicly available sources. blinkx does not own Weather Notifications LLC, a fact that could have been established by contacting the Office of the Secretary of the State of Minnesota. Ironically, the blogger was forced to redact portions of the blog to correct this factual error that the app “shows Blinkx [sic] ads,” following independent verification by media. blinkx does maintain a commercial relationship with Weather Notifications, where the Company provides the monetization engine for this application and others like it. blinkx puts all such software and applications through a series of proprietary and third party tests before approving them for distribution and monitors them on an ongoing basis.
References to the legacy Zango code snippets, processes, terms, methodology and license agreements are immaterial, since blinkx runs its ad-supported software products in a manner fully in line with all applicable industry standards. The entire legacy Zango code base was refactored, along with the evaluation methodology and distribution process for the monetization engine. The references to 180search Assistant in the code base, in non-utility functions, are immaterial but have been removed. blinkx has instituted an industry leading and proprietary methodology to approve, verify and certify apps that meet or exceed existing industry standards. Contrary to the way it was portrayed in the blog, the reference to the interaction with the security vendor (one of many that blinkx routinely and successfully works with) is in fact an example of one of many changes that blinkx has adopted to improve former Zango and industry practices. In this particular case, it appears that the security vendor referenced had a previous relationship with the blogger and may have worked with him in reference to Zango’s practices and the FTC. The vendor therefore may have been predisposed to rejecting any outreach by blinkx. Finally, since blinkx does not own Weather Notification LLC, it is free to partner with any organization, and price and distribute its products as it deems fit. The statement about blinkx providing the primary source of revenue and reason for Weather Alerts to exist is disingenuous and wrong.
Meanwhile, Zango-delivered advertising remains a major cause of concern. Zango’s core advertising product remains the browser popup—a disruptive form of advertising unpopular with most users and also unpopular with most mainstream advertisers. Notably, Zango’s popups perpetrate various advertising fraud, most notably ‘lead stealing” affiliate windows that cover merchant sites with their own affiliate links. If the user purchases through either window, the Zango advertiser gets paid a commission—despite doing nothing to genuinely cause or encourage the user’s purchase. (Indeed, the popup interrupts the user and thereby somewhat discourages a purchase.) At right, I show a current example: In testing of January 19, 2014, Blinkx/Zango sees a user browsing Walmart, then opens a popup to Blinkx/LeadImpact (server lipixeltrack) which redirects to LinkShare affiliate ORsWWZomRM8 and on to Walmart. Packet log proof . Thus, Walmart ends up having to pay an affiliate commission on traffic it already had—a breach of Walmart’s affiliate rules and broadly the same as the practice for which two eBay affiliates last year pled guilty . I’ve reported Zango software used for this same scheme since June 2004 . As shown at right and in other recent examples , Zango remains distinctively useful to rogue affiliates perpetrating these schemes. These rogue affiliates pay Blinkx to show the popups that set the scheme in motion—and I see no sign that Blinkx has done anything to block this practice.
It is important to note that mainstream publishers, such as MSNBC.com and People.com, routinely use the ad formats referred to by the blogger, regardless of his moral disposition toward this advertising format. In fact, TV ads are arguably the most intrusive of all ad formats, yet they work exceptionally well, as evidenced by the $70 billion spent annually on TV advertising. This section of the blog continues to assert that Zango’s core advertising product remains the browser popup and that Zango’s popups perpetrate various advertising fraud, most notably “lead stealing,” as referenced through the Walmart example, insinuating that blinkx enables and fosters such activity. First, the type of ad product referenced by the blogger in this section is one of several that blinkx uses to provide a comprehensive suite of solutions for advertisers. Second, note that the commission paid by the merchant (Walmart) is to one of its affiliates, who is a blinkx advertiser, and not to blinkx directly. As stated in its Advertiser Terms and Conditions, blinkx specifically prohibits the kind of activity referenced above. Moreover, lead stealing is doubly prohibited through the advertiser’s own terms and conditions with its affiliates – providing a redundancy and failsafe against such activity. In fact, blinkx does not allow shopping cart or basket targeting, which is the key moment for lead stealing during the online purchasing process. The reference in the blog to the activities of two eBay affiliates last year actually pertains to “cookie stuffing,” and not lead stealing as in the assertion regarding blinkx, and any reference to practices dating back to 2004 is meaningless. Finally, given the sheer volume and real time nature of the transactions involved, there is always the possibility of circumventing any technical measures that may be put in place, which is why blinkx has instituted compliance procedures to routinely spot check its systems and processes manually.
Rather than put a stop to these practices, Blinkx largely attempts to distance itself from Zango’s legacy business. For one, Blinkx is less than forthright as to what exactly it purchased. In Blinkx’s 2010 financial report , the first formal investor statement to discuss the acquisition, Blinkx never uses the word “Zango” or otherwise indicates the specific company or assets that Blinkx acquired. Rather, Blinkx describes the purchase as “certain net assets from a consortium of financial institutions to facilitate the growth of the video search and advertising businesses.” If a reader didn’t already know what Blinkx had bought, this vague statement would do nothing to assist.
Even when Blinkx discusses the Zango acquisition, it is less than forthcoming. UK news publication The Register quotes an unnamed Blinkx spokeswoman saying that Blinkx “purchased some technical assets from the bank [that foreclosed on Zango] including some IP and hardware, which constituted about 10 per cent of Zango’s total assets.” Here too, readers are left to wonder what assets are actually at issue. A natural interpretation of the quote is that Blinkx purchased trademarks, domain names, or patents plus general-purpose servers—all consistent with shutting the controversial Zango business. But in fact my testing reveals the opposite: Blinkx continues to run key aspects of Zango’s business: legacy Zango installations continue to function as usual and continue to show ads, and Blinkx continues to solicit new installations via the same methods, programs, and partners that Zango previously used. Furthermore, key Zango staff joined Blinkx, facilitating the continuation of the Zango business. Consider Val Sanford, previously a Vice President at Zango; her LinkedIn profile confirms that she stayed with Blinkx for three years after the acquisition. I struggle to reconcile these observations with the claim that Blinkx only purchased 10% of Zango or that the purchase was limited to “IP and hardware.” Furthermore, ex-Zango CTO Ken Smith contemporaneously disputed the 10% claim, insisting that “Blinkx acquired fully 100% of Zango’s assets.”
blinkx on occasion will enter into commercial transactions to further its business needs and is under no obligation to discuss the purpose or plans of such transactions above and beyond its reporting obligations, or react to the unsubstantiated and unqualified comments of parties who were likely not privy to confidential information. As stated earlier, blinkx did not purchase Zango and has never operated any business under the Zango name. blinkx did acquire specified assets relating to Zango out of a foreclosure sale from a consortium of banks on April 16, 2009, approximately three years after FTC action and subsequent remediation by Zango of its business practices. Concurrent with the asset acquisition, blinkx also hired select ex-Zango staff into the blinkx organization. The ad-supported software business that blinkx runs today complies fully with industry standards and requirements for the distribution and monetization of desktop and mobile ad supported software and applications – in particular, regarding procedures around consent, choice and uninstallation. Current practices bear no relation to the ex-Zango practices that led to FTC action in 2006.
Blinkx has been equally circumspect as to the size of the ex-Zango business. In Blinkx’ 2010 financial report , Blinkx nowhere tells investors the revenue or profit resulting from Zango’s business. Rather, Blinkx insists “It is not practical to determine the financial effect of the purchased net assets…. The Group’s core products and those purchased have been integrated and the operations merged such that it is not practical to determine the portion of the result that specifically relates to these assets.” I find this statement puzzling. The ex-Zango business is logically freestanding—for example, separate relationships with the partners who install the adware on users’ computers. I see no proper reason why the results of the ex-Zango business could not be reported separately. Investors might reasonably want to know how much of Blinkx’s business comes from the controversial ex-Zango activities.
As for revenue attribution to specific products, blinkx places equal importance on all of its product lines and acquisitions and seeks to integrate people, processes and technologies into the greater business to derive the benefits from enterprise synergy. Otherwise, Investors would and should question the logic of such acquisitions. Zango assets were acquired in foreclosure, and it is impractical to isolate their impact to the Company. Carry-over technology and staff have been integrated within the broader blinkx ecosystem, which we reference as part of our business and growth strategy. blinkx is under no obligation to expend resources and energy to detail information beyond its regulatory requirements. For philosophical, commercial and competitive reasons, the Company does not feel it is useful or advantageous to share information that it considers sensitive, and chooses not to do so. This position is fully compliant with all applicable standards and regulations and is consistent with and, in certain cases, exceeds the reporting practices of the giants in the industry. Other than to satisfy academic curiosity, blinkx sees no reason to change its reporting strategy or expend resources to research, measure and audit this information.
Indeed, Blinkx’s investor statements make no mention whatsoever of Zango, adware, pop-ups, or browser plug-ins of any kind in any annual reports, presentations, or other public disclosures. (I downloaded all such documents from Blinkx’ Financial Results page and ran full-text search, finding no matches.) As best I can tell, Blinkx also failed to mention these endeavors in conference calls or other official public communications. In a December 2013 conference call, Jefferies analyst David Reynolds asked Blinkx about its top sources of traffic/supply, and management refused to answer—in sharp contrast to other firms that disclose their largest and most significant relationships.
As an LSE AIM listed company, blinkx is in full compliance with all applicable financial rules, regulations and reporting requirements as described in the latest IFRS Guidelines, and has been audited by Deloitte since the Company’s IPO in 2007. We believe that we meet and exceed the standards set by industry giants, and are fully reporting the level of detail required of us. As far as we are aware, no publicly traded industry leader provides the level of disclosure advanced in the blog. More importantly, such separation would artificially segment the business in a manner not reflective of how we view, operate or aspire to grow the business. We have integrated the business and report at the level of conventional and premium revenues. In addition, blinkx’s competitive advantage stems from differentiated technology, surrounded by a commercial ecosystem of supply, content and demand partners. The Company views its list of top clients and partners as commercially sensitive information, and does not generally disclose such information for competitive reasons – another practice consistent with that of publicly-traded industry leaders. However, the Company has provided a representative set of key partners in publicly available presentations and materials. In our view, any further disclosure will only satisfy the curiosity of our competitors and cannot, therefore, serve shareholders’ interests.
In March-April 2012, many ex-Zango staff left Blinkx en masse. Many ended up at Verti Technology Group, a company specializing in adware distribution. Myriad factors indicate that Blinkx controls Verti: 1) According to LinkedIn , Verti has eight current employees of which five are former employees of Zango, Pinball, and/or Blinkx. Other recent Verti employees include Val Sanford, who moved from Zango to Blinkx to Verti. 2) Blinkx’s Twitter account: Blinkx followsjust nineteen users including Blinkx’s founder, various of its acquisitions (including Prime Visibility / AdOn and Rhythm New Media), and several of their staff. Blinkx follows Verti’s primary account as well as the personal account of a Verti manager. 3) Washington Secretaty of State filings indicate that Verti’s president is Colm Doyle (then Directory of Technology at Blinkx, though he subsequently returned to HP Autonomy) and secretary, treasurer, and chairman is Erin Laye ( Director of Project Management at Blinkx). Doyle and Laye’s links to Blinkx were suppressed somewhat in that both, at formation, specified their home addresses instead of their Blinkx office. 4) Whois links several Verti domains to Blinkx nameservers. (Details on file.) Taken together, these facts suggest that Blinkx attempted to move a controversial business line to a subsidiary which the public is less likely to recognize as part of Blinkx.
This is another example of the blogger’s attempt to use pseudo investigative and convoluted arguments to foster the perception of impropriety. Through its acquisitions and for commercial purposes, blinkx inherited and maintains a portfolio of legal subsidiaries. Verti Technology Group, a “company” that the blogger calls into question, is indeed a blinkx subsidiary, but is far from the “company specializing in adware distribution” that the blog claims – something that could have been confirmed by a phone call to the Company. Verti Technology Group represents blinkx’s consumer application download business, and blinkx operates these products in a manner compliant with all legal requirements, as well as industry standards and practices, particularly around consent, choice and uninstallation.
2. The Legacy AdOn Business
In November 2011, Blinkx acquired Prime Visibility Media Group, best known for the business previously known as AdOn Network and MyGeek. I have critiqued AdOn’s traffic repeatedly: AdOn first caught my eye when it boasted of relationships with 180solutions/Zango and Direct Revenue. New York Attorney General litigation documents later revealed that AdOn distributed more than 130,000 copies of notorious Direct Revenue spyware. I later repeatedly reported</