Is it time to force PC makers to disclose how much they make from crapware?
When it preinstalled the Superfish adware on consumer PCs, Lenovo sold its customers out for a pittance, but it still hasn't had to disclose how much it received. Maybe it's time for a Truth in Labeling act to shine a light on this dark corner of the PC market.
When your business model quite literally depends on how much misery you can convince your customers to endure, your industry has a problem.
I am, of course, speaking about the market for consumer PCs running Microsoft Windows. Buyers have an abundance of choices, across a broad range of form factors and price ranges. Unfortunately, many of those choices are mediocre, offering an initially unpleasant experience that rarely improves over time.
The worst offenders in this unhealthy ecosystem are PC makers, who struggle to squeeze out a profit in the cutthroat consumer space. The most popular way to lower the price tag that consumers see? Accept payments or commissions to preinstall third-party software on new PCs.
It's a practice that's been going on for more than a decade, as PC prices have plunged from the thousands of dollars to mere hundreds. A little over three years ago, I documented the miserable experience that consumers have to endure when they buy a new PC. In one example, I found that buyers of a new Samsung PC had 53 separate third-party programs installed as part of their performance-killing out-of-the-box experience.
Last week, via email, I sent three specific questions to a Lenovo spokesperson:
How many consumer PCs did Lenovo ship into the channel with the Superfish adware and root certificate preinstalled?
Were the affected PCs restricted to any specific geographical regions?
How much money did Superfish and its related companies pay Lenovo as part of the agreement that resulted in this distribution, and what percentage of the total third-party software revenue did that represent for the models in question?
The Lenovo spokesperson politely but firmly declined to answer all three questions.
According to sources with knowledge of the deal, Lenovo certainly made less than $500,000 from Superfish. Forbes believes the deal was only worth between $200,000 and $250,000, a paltry sum given the massive earnings at the Chinese giant and the potential legal and PR costs the company has and will incur throughout the Superfish aftermath...
Seriously, Lenovo customers, they sold you out for pocket change.
I am positive that Superfish made an order of magnitude more from this sleazy deal. They've raised roughly $20 million from some Silicon Valley venture capitalists, according to TechCrunch. And in one of those great ironies that those of us who follow this sleazy space know only too well, Forbes just last month included Superfish on its list of America's Most Promising Companies.
Superfish brings in $38 million of revenue each year, Forbes says, and the company brags that 40 percent of its developers have masters degrees or PhDs, apparently skipping the annoying "business ethics" and "social responsibility" tracks at Stanford or whatever conscience-free institution of higher learning they graduated from.
Look, I've been following creepy companies like these for a long time. Lying comes as effortlessly as breathing to them. And they can't be trusted anywhere near a computer that your Mom or your accountant is going to use.
Nor can we trust PC makers like Lenovo, who put out a press release that tried to paint the company as crapware addicts promising to go cold turkey but actually left plenty of room for the habit to go on indefinitely. (Spoiler: The trial versions of antivirus software that Lenovo plans to continue installing on new PCs bring them more money than all the other software combined.)
So maybe Microsoft can insist that its OEM partners stop polluting new PCs with unwanted software? Sorry, that's not going to happen.
The unintended consequence of allowing PC makers to substitute and support any software they want? Middleware became crapware. Desktops were splattered with icons for unwanted software. Preloaded media players and toolbars and add-ons and trial editions slowed PCs to a crawl. Even today, some retail PCs are crammed with so much third-party software that they take forever to start up. Microsoft still can't legally do anything to make your overall Windows experience better when you buy a Windows PC sold by an OEM. All they can do is try to shame their OEM partners into doing the right thing.
The U.S. consent decree ended a few years ago, but its painful memories live on in Redmond. And there are much fresher memories of billion-dollar spankings from the EU. Any attempt to actually prevent OEMs from installing non-Microsoft software on a new PC would be an open invitation for a new round of antitrust hearings and a few more billions of dollars/Euros in fines.
So what's the solution?
Well, if OEMs won't tell humble reporters like me how much they're being made to create miserable PC experiences, perhaps it's time for regulatory agencies to get involved.
I'd love to see a label, prominently displayed on every new PC, that shows how much the PC maker collected in revenue for preinstallations, along with a full disclosure of how much it stands to collect in commissions for every trialware offer it promotes.
My educated guess is that the total amount that PC makers receive for every PC is a few dollars. A mere pittance, compared to the misery they make us endure when we buy one of these crapware-laden packages.
So why not ask the U.S. Federal Trade Commission and its European counterparts to force PC makers to 'fess up and disclose every single penny, literally, that they received to pollute your PC? If the required disclosures included a list of 53 programs whose average utility is less than zero and for which the OEM collected a penny or so, would that perhaps be incentive for those OEMs to turn down some of those deals?
If you knew that Norton or McAfee were paying your PC maker $25 for shoving endless popups in your face to try to hard-sell you into buying an annual subscription, how would you feel? Would you perhaps pick the PC that had the shortest list of junk you needed to remove?
Lenovo won't tell you how much they're selling you out for. Other PC makers won't either. Maybe it's time to make those disclosures mandatory.