May 20, 2010 | The Wall Street Journal

After an investigation spanning more than a year, Microsoft Corp. has filed two lawsuits involving what it says is a new and alarming type of click fraud used by unscrupulous Web publishers to enrich themselves at the expense of online advertisers, including many small companies.

Microsoft, of Redmond, Wash., filed suit on Monday in federal court in Seattle against Eric C. Ralls and the company he founded, RedOrbit Inc., a Dallas science news and shopping site, plus 10 unnamed defendants. The software giant claims RedOrbit engaged in “click laundering,” a term for making bogus clicks on third-party sites look like legitimate clicks on a publisher’s site, thus inflating ad revenue.

RedOrbit, a former partner on Microsoft’s adCenter service, denies the claim. “We do not engage, assist in, or condone click fraud,” Mr. Ralls said in a statement. “Microsoft’s allegations are completely baseless.”

Microsoft also filed a similar suit against 20 unnamed “John Doe” defendants who allegedly committed click laundering through HelloMetro Inc., a network of online city guides based in Louisville, Ky. The company itself is not named as a defendant, and spokesman Clark Scott said the company did not engage in fraud and is cooperating fully with Microsoft.

 

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