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The Microsoft-Claria deal: Read all about it

There's a noteworthy story in the NYT just published about Microsoft offering to buy the controversial Silicon Valley adware company, Claria.

That's weird. About three weeks ago, we heard about the same deal, from a single source (perhaps the same single anonymous source cited by the Times?). The source told us they were shopping the news around. The source, who said they were in direct contact with a banker said to be negotiating the deal, told us Ballmer had approved the purchase offer. So, seeking to confirm it, we called up every investor on Claria's board, and one of them, Magdalena Yesil, confronted CEO Jeff McFadden for us and asked him about it. She came back and told us that McFadden said there was nothing to the rumor -- and she was on the record. We decided not to report it (a single anonymous source did not a story make). That was all three weeks ago. Now the NYT has the story and says the talks have only been for the past two weeks...strange.

Maybe the Times heard from a more convincing, credible source, and just wasn't informed that the talks had actually lasted longer...we don't know.

Stay tuned. We'll try Magdalena one more time tomorrow.

Update, Thurs., 6:19am: The WSJ follows, just a few hours later, with the same story, mentioning that the story was first reported by NYT. Again, anonymous sources.

Update, Thurs, 7:49am: Reached Magdalena Yesil, who told us: "I sit on the board, and I would know if there was such an offer," she told us, "and I havenāt heard of such an offer." She said the company has a board meeting at 1:30pm today. About an alleged deal, she repeated: "That is significant enough that I would have known about it." We'll try McFadden again this afternoon.

Now David Sze, of Greylock, who isn't involved with the company much anymore, told us a few weeks ago, when we were first reporting this, that Claria used to have regular discussions with portal companies about a possible deal -- but that was years ago.

Update, 8:38am: Techdirt follows, likewise incredulous: The deal seems so ridiculous and so unlikely that it's hard to believe it could possibly be true.


Trading one form of illegal application installation (kaza) for another, Microsoft's desktop monopoly. Go figure, their anti-trust lawyer's must me masochists.

It will sure solve some the application churn problems Gator faced, but will Elliot Spitzer view the anti-trust issues with a blind eye?

This has to be a rumor. I think you are right Matt.

Alex on June 30, 2005 12:40 AM
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I believe they are buying Claria for Gain (a product). This gives them targetted advertising that can be used in MSN search or to provide a service similar to adwords. My attempt at trying to explain this:


Nik Cubrilovic on June 30, 2005 9:26 AM
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I don't have any special knowledge as to whether or not there's a deal. But something is clearly going on. Microsoft's Antispyware program is now recommending that users "Ignore" Claria's presence on their PCs, whereas previously it recommended removal.

Screenshot linked from last paragraph of http://www.benedelman.org/news/063005-1.html .

Ben Edelman on July 1, 2005 4:28 PM
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Microsoft could not risk the slightest hint that they might deploy spyware (as a part of Windows?). We would all want to switch to Linux (etc.) as soon as possible. Whatever trust customers still have in them would be lost. If the purchase is real Microsoft would want to appear to buy Claria only to put it and spyware out of business. But would they?

They certainly do not need Claria to be able to write spyware for Windows. But they certainly could help Claria to write the "best" Windows spyware for "spies". (Not "best" for us)

What better way to easily discredit Microsoft, by spreading this rumor? Interesting story. I read it in the WSJ today.

Mike on July 2, 2005 6:32 PM
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