May 2, 2005--New York Attorney General Eliot Spitzer filed a lawsuit against a California-based software company Thursday, charging that some of the software it produced degrades the performance of computers and the Internet.

The suit specifically targets spyware and adware produced by the company, Intermix Media Inc., and asserts the company actively tricked customers into downloading software with false advertising.

"Spyware and adware are more than an annoyance," Spitzer said. "These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers' efforts to remove them from their computers."

The attorney General also mentioned possible affects on e-commerce, striking a chord with small business owners.

"Corporate America spends hundreds of millions of dollars on protecting their network's integrity," Kevin O'Connor, CEO of Tech Valley Communications, a privately help telecom company based in Albany, N.Y. said. "Many small businesses don't have a large security budget and malicious software could get in their networks and destroy their systems, and their business."

Since the first of the year more than 43 bills that pertain to spyware have been introduced in various state legislatures. Two bills, The Spy Act and the Spy Block Act, are currently on the floor of the House and Senate, respectively.

"You name the organization and they are going to be affected by this scourge," Larry Kobilinsky, a computer expert and forensic scientist at John Jay College, said. "It's not a victimless attack on our computers, because it comes at a tremendous cost, taking up valuable time and energy when you go online."

Intermix has been hit hard by the suit, with shares of the publicly traded company dropping around 17% by Friday after the suit was announced Thursday.

"Intermix does not promote or condone spyware," Christopher Lipp, senior VP and general counsel for the software company, said in a statement. "We expect to continue our discussions with the N.Y. Attorney General's Office and are still hopeful of reaching an appropriate and amicable agreement."

Intermix also mentioned that the business practices currently employed were "instituted under prior leadership."

As far as government involvement, O'Connor, a former Albany-area politician turned entrepreneur, is "cautiously optimistic" of the State's involvement in such matters.

"There defiantly needs to be something done about this, and I'm not an advocate of government intervention in business," he said. "But this problem is crying out for regulation."