Google goes to court in Australia over sponsored links

[Dan]

Source: Ars Technica (http://arstechnica.com/news.ars/post/20070910-google-goes-to-court-in-australia-over-sponsored-links.html)

Google appeared in court today in Australia to fight charges of misleading and deceptive conduct regarding its sponsored links. The Australian Competition and Consumer Commission (ACCC) told the judge that the search giant does not do enough to differentiate sponsored links in its search results from regular search results.

"Google represents to the world that its search engine is so good that it can rank, out of the multitudinous entries of the worldwide web, these entries in order of relevance of the user's query," ACCC barrister Christine Adamson told the court, according to AFP. "Part of that (reputation is) that it's not influenced by money, it's influenced by relevance."

The ACCC isn't a fan of the company's allowing sponsored links purporting to represent one company when, in fact, they point to a competitor. The group said that, in 2005, an Australian classifieds called the "Trading Post" purchased sponsored links from Google with the names of two competing dealerships, Kloster Ford and Charlestown Toyota. The ACCC says that the Trading Post violated sections 52 and 53(d) of the Trade Practices Act of 1974 and blames Google for allowing it to happen in the first place. The organization asked for an injunction that would ban Google from publishing sponsored links representing a relationship between businesses that doesn't exist, clearly distinguished sponsored link results, for Google to establish a trade practice and compliance program, and costs.

If the ACCC wins, Google will need to implement some major changes to its sponsored link program that could ultimately drive up costs to advertisers. As it stands right now, the system is mostly automated—in order to prevent companies from purchasing sponsored links under the names of other companies, Google would have to add in a somewhat significant level of human monitoring to the process, which would increase its overhead costs.

Until next month, however, we're only left to speculate on what might happen in this case. Australian Federal Court judge Jim Allsop adjourned the case until October 4.

All I can say is... It is about time :)

[praveen]

Its abt time Google lost this one :)

[George]

As if Google is the only one... you can find a billion websites that attempt to attract customers by using "words" of their competitors.

[Dan]

Looks like the ACCC is using Google's tactic of targeting the big names :)

[Dan]

The situation isn't new (as George pointed out) and as also reported by one of the moderators on this forum back in July of 2006 (http://iserv.com.au/default.asp?t=165) when Dell was being threatened by Hewlett Packard, Acer and Toshiba for using Google advertising to deceive.

The moderator also noticed that Toyota was trying to rank for the name Holden Ute.

Holden being a competitor.

The irony here is that the ACCC is suing Google for allowing The Trading Post, which is an Australian auction/sale newspaper, to use the keyword Toyota.

[Bernard]

Google has been through this ringer before. I got involved in a long discussion on the issue (http://www.ihelpyou.com/forums/showthread.php?t=14868) when Geico sued Google in 2005. I had to change my mind on the subject around page 14.

BTW, American Airlines is also suing Google on this issue:

http://www.pcworld.com/article/id,136092-c,techindustrytrends/article.html

[Dan]

I have the feeling the ACCC will win. They generally don't launch legal action without solid advice.

They have routinely kept Telstra, Australia's largest Telco and a $70 billion company, in-line by peppering them with legalese.

Many people think the ACCC is a dinosaur that obstructs progress. They may be right, but I think this particular case (if it is as straightforward as it seems) demonstrates that they can still be useful.

If Google does win, it will give them the impetus to try and monopolise advertising further and rub out even more competitors. I can't see that as being useful to anyone outside of Google.

BTW, Google is still showing the Toyota Ads (http://vilesilencer.com/images/toyota-google.gif) for Trading Post so they must think they have this one in the bag....

[Dan]

Looks like the ACCC has changed tack.

They have decided to drop the case against Google AU and instead target Google US

Source: Sydney Morning Herald (http://www.smh.com.au/news/web/accc-targets-google-in-us/2007/10/04/1191091237961.html)

ACCC spokeswoman Lin Enright denied claims the regulator was confused when it filed its original application, saying the case against the subsidiaries was dropped because Google Inc. had "indicated it was responsible for all representations made on the Google.com.au site''.

In documents filed with the court, the regulator claimed Google did not clearly distinguish between regular - "organic" - search results and ads at the top of the results page, which Google calls "Sponsored Links".

Google was therefore misleading customers because it claimed to rank search results based on relevance, not the money it received from advertisers.

Google has refuted the claims, saying the wording "Sponsored Links" and the fact Google used coloured shading when presenting the links clearly indicated they were ads. The ACCC said the shading was "very subtle" and depended on the angle of the screen.

In court today, the ACCC expanded its claims to cover not only the ads at the top of the results page but also those on the right-hand side. Google's lawyers accused the regulator of "flipping" on its claims and said there was no way the right-hand side ads could be ranked above the search results as they run in parallel.

Further, the world-first case has the potential to set a global precedent over the extent to which a company can use a competitor's name to attract customers in search engine advertisements. The judgment will affect not just Google but all search engines.