I am a strong advocate of net neutrality which dictates that all Internet traffic should be unfettered. It is bad enough ISP's use traffic management techniques to slow the Internet experience down for customers but this deep level of DNS hijacking is dangerous for all users of the Internet.
What Karoo are doing breaks the Internet insomuch as what users of their services get to see on a mistyped URL in their web browser is not what the user should see. When a user mistypes a URL in such a way as there are no other DNS matches they should be presented with a 404 error page with designed by a web master or a blanket 404 page telling the user that what they typed was not found. By hijacking the DNS request at such a deep level users of Karoo's DNS do not see the 404 page instead they are redirected to a search engine. A poor search engne at that but a search engine nonetheless.
Karoo, of course, get what is called a payback for doing this. This means that once redirected to the search engine, if a user uses said search engine then clicks on one of that search engines commercial links Karoo get a payment. Hence the name payback.
When the seller of .com and .net domain-names Verisign tried to do exactly the same thing back in 2004 the ISPA called it a "scandal" and accused the firm of "presumption that they own the Internet". Quite how they can say such a thing then let a U.K. based ISP get away with doing exactly the same thing only those within the ISPA know.
This sort of DNS hijacking sets a dangerous precedent not only for Karoo customers but also for customers of other ISP's because once it becomes known that on ISP has got away with doing such then you can bet your last penny other ISP's will follow suit. Further, once Karoo realise that even though their customers have voiced concern about it (that is just one such place, concerned voices about this practise can be found elsewhere too) and even though Karoo offer an 'opt-out' alternative once they are sure that they will get away with it, even though they surely know it breaks other aspects of the Internet too, it is only a matter of time before they unleash something bigger, and therefore worse for their customers, like 'phorm' onto an unsuspecting customer-base.
phorm is a company that provides hardware to ISP's, again hijacking the data stream, so that user targeted marketing advertisements can be overlayed on the customers browser no matter what that customer may be doing at the time that the injected hardware spits out it "thoughts" on what the customer may want to see at that time. In all my years of pre and current Internet traveling I have never heard of anything more scary being introduced from a user point of view. ISP's will also get a payback from this too. The backlash again 'phorm' has already begun as you can read on the link provided.
Anything that injects itself at any level of the Internet data stream between the customers computer and the other end of where that customer wanted to be is just plain wrong and breaks the TCP/IP prrotocols on several levels. The sooner the ISPA acts and stops such things the better the Internet will be for all connected to it.
If you are unfortunate enough to have to use Karoo as your ISP and you would prefer, as I do, that the money Karoo gets from this level of DNS hijacking goes instead to a not-for-profit organisation who offer alternative name servers (DNS) that work just as well if not better, than those offered by Karoo then consider using OpenDNS instead. At least by using OpenDNS you will know you are helping to keep a not-for-profit organisation afloat rather than allowing money to go to a greedy grubbing ISP like Karoo.