• by Wendy Davis  @wendyndavis, April 22, 2009

Zango has followed former rivals WhenU, Claria and Direct Revenue to the graveyard of failed adware companies.

Former Zango chief technology officer Ken Smith wrote on his blog that the company had taken on too much debt and also suffered from marketer and publisher defections.

Smith acknowledged in his post that Zango was plagued by improper installations of its pop-up serving software -- a problem that consumer advocates and the Federal Trade Commission had flagged. "Back in 2003-2005 we partnered with some people that we should never have partnered with," Smith wrote. "We almost completely outsourced our distribution to them, and we let them promote and install our software without adequate oversight or supervision."

He estimated that around 4% of the installs during those years were the result of drive-by installations done with no notice to users. Smith also said that in many other cases, users installed the software without sufficient information about it.

In 2006, Zango agreed to pay the FTC $3 million to settle a complaint alleging that the company turned a blind eye to the installation tactics of its affiliates.

As the FTC and various state attorneys general cracked down on adware, marketers and publishers began avoiding it. Smith wrote on his blog that almost none of the company's largest advertisers in 2005 were still using Zango by the end of 2006.

Last year, Zango laid off 68 employees, representing around 30% of its workforce. At the time, a company spokesperson said the layoffs were part of a strategic decision to focus on the new casual gaming offering Platrium.

Video search engine Blinkx has reportedly acquired some of Zango's assets.

Zango still has a lawsuit pending against spyware removal vendor Kaspersky Labs, which distributes software that purged Zango from users' computers. Zango alleged that Kaspersky Labs wrongly interfered with Zango's relationships with consumers. A U.S. District Court judge in Seattle ruled against Zango, but the company appealed and the 9th Circuit is currently considering the case. It isn't clear what effect Zango's shuttering will have on the lawsuit.