IronSource denies its business is based on 'deceptive' malware
The accusation was made by Ben Edelman, an associate professor at the Harvard Business School and frequent scourge of tech companies who use questionable tactics to drive their revenues. He said in a blog post that the company was "strikingly deceptive."
IronSource recently closed a $100 million-plus round of investment funding which likely values the company at more than $1 billion. The company is interesting because unlike most tech startups in the mobile app software market, a majority of its revenues - believed to be around $350 million annually - come from Google's Android platform rather than Apple's iOS competitor.
Because the company is expected to go public soon, IronSource can expect to find its business to be placed under a microscope by potential future investors. On Feb. 18, Edelman wrote a bruising analysis of IronSource, which alleged the company bundles unwanted adware with its downloads.
Although most people have no idea who Edelman is, tech execs ought to live in fear of him. His takedown of the video ad company Blinkx chopped 21% of the firm's stock. His work with eBay helped the auction company persuade the FBI to prosecute two of its top affiliate marketers, both of whom were ultimately sentenced to federal prison for defrauding the company of millions of dollars.
So any negative attention Edelman may focus on IronSource will likely be regarded as a huge headache.
IronSource's core business is software and app download technology. It's the company that app developers use when they need to absolutely make sure that their products are being successfully installed on users' machines. Download tech is also useful because once you have persuaded a user to install a new app, the download menu can prompt them to try other products. Indeed, IronSource has expanded its download business into a mobile app install ad network to do just this.
Edelman described IronSource as "deceptive":
IronSource installations are often strikingly deceptive: they promise to provide software IronSource and its partners have no legal right to redistribute (indeed, specifically contrary to applicable license agreements); they bundle all manner of adware that users have no reason to expect with genuine software; they bombard users with popup ads, injected banner ads, extra toolbars, and other intrusions. It's the very opposite of mainstream legitimate advertising. We are surprised to see such deceptive tactics from a large firm that is, by all indications, backed by distinguished investors and top-tier bankers.
Most of Edelman's analysis focuses on a step-by-step description of a download of Google's Chrome browser, which loaded unwanted adware onto his machine via IronSource in a way that Google would likely not approve of.
In fact, IronSource has thousands of companies using its download platform, and it cannot control them all, IronSource CEO Tomer Bar-Zeev told Business Insider. "We have a compliance team working hard to actively remove them from the network," he says. "We take compliance and security very seriously, and apply both automated and manual reviews for every developer using our SDK [software download kit]."
"There are now more than 10K developers that are using our product and services and I believe that most of them are honest, we do over 7M installs/day," he says. "Our compliance team is constantly checking the products and traffic sources and we are becoming better and better in eliminating the ones that are abusing our systems."
As an example of how hard it is to police bad actors on large networks, he pointed to Google's own Adwords ad program, on which he recently saw a deceptive ad for Chrome. "Even Google, with their massive compliance force, could not prevent a deceiving from appearing in Google Adwords, this shows how difficult it is to deal with abusers when you operate in massive scales like we do."