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A consumer watchdog is taking legal action against Google over the way it sells and displays its sponsored links, in a case that could "send shudders down the industry".
The Australian Competition and Consumer Commission (ACCC) said that it believed its action, which named Google Inc and Google subsidiaries in Ireland and Australia as defendants, was “the first to seek legal clarification of Google’s conduct from a trade practices perspective".
The case stems from 2005 when Trading Post, an Australian classified ads magazine, took out sponsored links in the name of two car dealerships from Newcastle, New South Wales. People clicking on the names of the dealerships found themselves on Trading Post’s website.
The ACCC dropped a case against Trading Post when the publication said it would stop using its competitors’ names in Google sponsored links. However, the watchdog now says that Google “engaged in misleading and deceptive conduct” by allowing Trading Post to buy ads in the name of the car dealerships.

In addition the ACCC is also claiming that the way Google displays its links is misleading.
On Google’s search results page, sponsored links appear in a coloured panel at the top of the page, and in a narrow column on the right-hand side of the page. Both areas include a small heading identifying the results as sponsored.
Companies and organisations can pay to get their results featured in these areas. In the main section of the page, results are determined by Google’s celebrated algorithm, which attempts to calculate the relevance and popularity of a page using a range of criteria including the number of inbound links to each page.
“Google, by failing to adequately distinguish sponsored links from ‘organic’ search results, has engaged and continues to engage in misleading and deceptive conduct,” the Australian Competition and Consumer Commission (ACCC) said in a statement.
Google Australia described the lawsuit as “an attack on all search engines” and said that it would contest it.
Shara Evans, head of the IT consultancy Market Clarity, said the case would have far-reaching implications if the court found that a search engine was responsible for monitoring everything that advertisers paid to put up as sponsored links.
“What would have a real impact is if Google had to take a policing role into the content of the advertisers,” she said. “That, I think, would send real shudders down the industry.”
Google has faced a stream of lawsuits from companies alleging that rivals have bought sponsored links triggered by their trademarked words or phrases. In one continuing case, American Blind & Wallpaper Factory is suing Google because searches for the company brought up sponsored links bought by its competitors.
Google has won similar cases in US federal courts brought by Geico, a car insurance company, and Rescue.com, an IT support company. Last year in France, Google lost a case in which the fashion company accused the company of running links to counterfeit goods alongside legitimate results.
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Google should have anything to do it with. Misuse of another's trademark is a matter between the trademark holder and the abuser. No advertiser (radio, newspaper, billboard or other) should be forced to vet all their customers statements and claims.
Max, Tokyo, Japan
This is another example of a 'win-win' situation for Google. The more the sponsorship and paid advertising becomes increasingly competitive, the more business' pay for their listings. Google makes the money, the result being companies online budgets soaring out of control.
It makes the 'free market' impossible as with competitors matching your every move thanks to Google, how can this online advertising be effective?
Stu O, Doncaster, UK
This is another example of a 'win-win' situation for Google. The more the sponsorship and paid advertising becomes increasingly competitive, the more business' pay for their listings. Google makes the money, the result being companies online budgets soaring out of control.
It makes the 'free market' impossible as with competitors matching your every move thanks to Google, how can this online advertising be effective?
Stu Owens, Doncaster, UK
It's like this... Google is a business that needs to make a profit. If you want your company to come up higher when people search google, just pay google for a higher spot.
It's called "Free Market" and it works really well.
This sounds like a frivolous suit brought on by whiners who are mad because they didn't think of using google correctly first.
Richb01, Austin, TX
Unfortunately the whole industry that started off fair and even handed has degenerated into paying the search engine providers for a skewed result. Far too many searches bring up links which have no reason to be associated with the key words typed in and just result in a major irritation by users. I appreciate there will always be similar sounding names coming up together but when its deliberately skewed its wrong and just a callous attempt to make money without assisting the user.
Mike, Alicante, Spain
Since when is "misleading advertising" a crime? (Not misleading claims!! please!!) Since when is it just because I'm a geek and can spot the ads that people who volunteer to go to a site are not "sold" one way or another...
Gee.. If that's the case every car dealer in the world needs to be fined.
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Earl , melbourne , fla
I am guilty of doing the same thing. Other sponsored search companies won't let you do it. In my case, I help people save $1450 when they search for my competition.
My gripe about Google is they let members of a professional organization, which has no relevance to my product, but they resent the fact that it exists, push me from #1 to page 11 in my best keyword. None of those sponsored links can do business with a nationwide customer base, but I can, so what is this "relevance" they claim to analyze?
Oh well, since I come up first or second in organic, I don't need to pay them at all.
DrBukk, Grovetown, GA
Regarding "genuine" search engines. There is a whole industry based around tailoring web sites to obtain better search engine placement within the algorithm ranked results (not the sponsored area). Google is no more or less genuine than any other engine.
Jack Benway, Tucson, Az
Not that ridiculous, however. In some countries, like China, there are continual battles about organic versus sponsored links. Not so much the problem of Google, but for Baidu, there is an issue with not being able to figure out which of the links in a long list of search queries is an advertisement, a sponsored link, an organic search term or a paid for search term.
I think that people and companies sue companies like Google to create web standards and I guess anyone who wants to sue will do so to create a benefit for themselves.
I also question whether a court decision alone would change the face of the web search business...
doug , Hong Kong, China
Google wants net neutrality in telecommunications to allegedly provide equal treatment for all content providers at the expense of the network owners ... what we need is search, sponsored links and paid search neutrality .... equal access for all ...
Dave Rusin, Rochester, New York
The links in question are a tiny tiny majority of all the sponsored ads google carries. The practice probably should, and probably will be ended. And it will have no real impact on google. This "shudders" nonsense is just media hype trying to make a story where one doesn't exist.
Lynn, Baltimore,
If other print - electronic and print are held responsible for clearing distinguishing between advertisments and other material why should not search engines?
Personally I find it very annoying when I wonder into an advertisement when I'm trying to find something else.
Stella , Gaborone, Botswana
Chances are, if you can't tell that those are sponsored links you've probably just started using the internet yesterday. Get real, folks. And quit hating on Google.
Rick Flair, Louisville, Kentucky
It's the advertisers that should be held accountable, the infringement is a direct result of their action. People are going after Google to get their story in the news.
Robert, Melborne, Australia
You've just been "Googled"
SKULLY, New York, New York
The reality is that Google is now a huge business, and parts of it will seek to maximise revenue without regard to how "fair" that action may be. I have no doubt that their actions will be "legal", but will they be fair?
The real problem for Google is that their image is being changed by all this. When I first started using Google it was because their operation was part of the "geek" world - entirely trustworthy. You knew their robots were scouring the web, and that the results you received were useful and reliable.
Now, a Google search will produce so much dross that it is simply not a good way of accessing information. One gets the feeling that all this is being driven by commercial considerations - and what a shame that is.
Phil Rutter, Bath, UK
I don't pay any attention to the ads. I would hardly know they are there. Part of the process of using search engines is to do one's own filtering. After all, what one is looking for is relevance.
David, Pemberton, Canada
keep me posted please.
Bob Hhoward, San Gabriel, Ca. 9l776
In the US, political-campaign advertisements by persons running for election must be clearly identified with the word "Advertisement" at the top of the ad. That way, people don't mistake the ad for an objective news item. I think the same sort of thing should be done on Google. People should know whether an item is general information or paid-for advertising. In any media, advertising should not be slyly presented as objective information, not even by an internet lead.
John Wilson, Santa Cruz, California
Geez. If it's not enough to LABEL sponsored ads as such, What else can they do? I'm 62 and can differentiate. Of course, I cxan also read.
Danny Ross, Mandeville, LA, USA
I find Google pretty pointless nowadays. It's not just the sponsored ads, it's the fact that it "interprets" your search word a la Microsoft and then gives you a list of completely irrelevant results. When I type a word in plural, I mean I'm looking for that word in PLURAL, dagnammit!
starling, Lancaster,
I don't see the case here... Google only makes money if you click on the link that IS marked. If they give you the same link in it's un-sponsored version you can't really expect them to mark it as sponsored, can you?
If, on the other hand, I'm wrong and they charge advertisers for clicks on organic results -- it's wrong.
If this is the case, though, I think the advertisers should be more upset than users...
Noam Nelke, Ra'ananna, Israel
Yeah, damn google. How dare they be more successful than I am?! They don't need more money than I do, we should take all of Google's money because I know what's best for everyone.
Fal, San Jose, CA,
As Goggle charge a fee for sponsored links, then they should also accept responsibility for any spurious links. Where as for a free link they should only have a duty of care ONCE a spurious link has been bought to their attention.
In both cases, there should be severe penalties for the company placeing the spurious links.
Personally, I don't find any problem distinguishing between sponsored and non-sponsored links. I also ALWAYS avoid the sponsored as they are inevitably of no use to me. The money bias of the algorithm makes them worthless.
Lance, Surrey, UK
I am sorry to hear this. In comparison to Yahoo and Microsoft, all of which I've used, Google is the most honest and clear in its writing and communication. This problem may be indemic to this kind of promotional medium. Hopefully it can be resolved. Google is the most customer friendly of the lot of them, in my experience.
Jerome A. Stoll, Newport Beach, California, US
I've never bothered using a sponsored link in my life. Any company worth its salt will rise to the top of the search page through good quality workmanship, not by bribing the search engine.
Callum, London, England
Google chooses its own morals then reverses them for its own financial gain. People may say that sounds like the perfect scenario if you can get away with it But when a company gets too big it loses the ability to control its subordinates.
Gone is the user friendly supplier, now we have paid for links and sponsored sites handicapping free choice .
Mans inherent laziness has been maxed to the full by Google and the tide is now changing.
Its prefrential rankings system are biased towards directories and aggregators with teh result that small firms haven't a cat in hells chance of accessing new customers because they have been priced out of the market.
Google has shown it can wreck a great idea and users are seeing now with the big brother plans of Google that it has gone too far.
It is too big and needs to be broken up ther needs to be a basis that makes quite clear that when you hit thity percent of a market you are locked out.
Robert D Marshall, London, England
I run a website and once competitors used our name in their Google advert. We contacted Google and they told the competitor to stop at once as it was infringing our copyright interests.
It says clearly in the Google Terms and Conditions that advertisers must not use competitors names and we have seen for ourselves that they enforce that.
So I can't see what more Google could do to be on the side of the good guys.
michele, Wales,
Terry wrote:
How many billions does one need anyway?
Envy is what drives this suit and all the hatred of Wal-Mart, Google and Microsoft, etc. Mind your own business for a change. This is not about infringement. It's about government control. You socialists never give up until you destroy freedom, do you?
David, Newton, IA
In the UK we have the same problem. Google allows sponsors to use competitors names & logos. They do not provide any means of address. Just happy to take the money.
SA, Coventry,
There is something quite ridiculous about this whole thing. If there are people who can't distinguish ebetween a sponsor link which is quite clearly labelled, then it is their problem, not Google. And if an ad is misleading, it is the advertizer fault, not Google.
As for search results, if you search for, say, "electric heater", then it should surely come out with companies that sell electric heater, sponsored or not sponsored, otherwise what use is a search engine? Unless the prosecutor can show that non-sponsored links don't show up in search or are discriminated against, there is no case to answer for. I think people are going to laugh at the Australians for failing to understand the basic idea of a search engine.
hazh, Oxford,
If the wallpaper company wins it will open season on the free market. For example, suppose your company name is Home Garden & Patio Company. That would mean that other companies could not use garden & patio as keywords? It would not help much if they called themselves the American Garden & Patio Company. First, all that means is that every company in America will add some common key word to their company name. Second, there might be people searcing for garden & patio equipment and want to limit themselves to "American" companies. The same thing could be said for companies like the "Quality Color Printer Company". Could such a company keep you from buying ads for your printers with "quality" as a keyword? Companies should just get over it. Let the buyer beware. There is no reason to interfere with the free market.
David, Newton, IA
This whole thing is ridiculous. Which part of clearly labelled 'sponsored links' is misleading?
Maya, London,
"Google, by failing to adequately distinguish sponsored links from âorganicâ search results, has engaged and continues to engage in misleading and deceptive conduct,"
This is ridiculous. The sponsored links are clearly labeled. If one can't distinguish between the sponsored results and the organic then it's their own fault, you can't blame google because you can't read. Just another stupid lawsuit tying up the legal system. Buying a sponsored link is an automated system, I doubt Google has the time or man power to check ever single one. There are going to be ads out there that use competitors info, just like their are sites out there who have competitors info embedded in their meta data. Get over it.
Brandon, Philadelphia, USA, PA
Sorry James, I'm with Shaun on this one. The sponsored ads are marked as sponsored, in a different colour and on a different part of the page. It's really not that hard to spot.
And i'm by no means a techie, i can just, you know, read......
Katy, Berkshire, UK
The fact is that Trading Post posted innacurate advertising. Google's part in this is that they placed this innacurate advertising without manually policing the authenticity of the ad. Also, whenever advertisers automatically sign up for the sponsored listings, it will clearly state in the terms & conditions that Google will not police this but rather the advertisers themselves. Google should fix their department who police these ads. Regarding if natural and sponsored links are distuingishable, it is prominently shown on every one of their pages. This case is similar to the other industry giants who gained a large marketshare (i.e. Microsoft) and organisations who wish to win a landmark against these giants.
Mikhail, London, UK
Google is going down and should go down. In Europe, Google doesn't allow companies to purchase campaigns with competitors' names but in the US, it is allowed.
How many billions does one need anyway? Companies increasingly have to purchase services or software to just maintain their compaigns everytime the "celebrated" algorithm is changed.
Terry, Slocomb, AL
What the heck is a "campais"?
bob burns, Dali Old Town, Yunnan, China
Shaun,
The entire point of text ads is that many, many, many people are unable to distinguish what's an ad. the BBC did a study last year and found that from a random sample of surfers, less than 13% of people questioned could point out all the advertisements on a given search result page for Yahoo or Google.
Just because you're a techie and can "spot the ads" doesn't mean that everyone else can. I bet your parents cant, and I know my parents cant. This deception is the very core business model of every search engine out there. Kinda sad, really.
james , san francisco, usa
This is a dispute between competing businesses infringing on each other's copyrights- plain and simple.
If I paid to place a libelous advertisement in a newspaper; why would the subject of the libel have any standing against the newspaper?
Even if Google doesn't have a requirement that its advertisers refrain from engaging in copyright infringment, the onus is still with the company perpetrating the fraud - not Google.
Jasonik, Brookline, MA, USA
So Trading Post lies by using a competitors name (what they did was use their competitor's name as a keyword in their google ad) and then blames Google for allowing them to do so. Therefore its Google's fault. Right. THat;s going to hold up in court.
Brett Blair, memphis, TN
It would be great to have a search engine that was genuine...but let's face it, we live in a capital society where everybody is out to make a dollar. Google is no exception to that and sells those first few things that pop up. You can buy which ever words you want to...including the ones in your competitors name. It's a darn shame!!
Donna, Atlanta, GA
With respect to Terry - will anyone ever get the idea that just because the Europeans think something is not right, that doesn't make it a fact? The whole EU ideal is to decrease merit and achievement and to cause everything to show as a shade of grey. it is only a step from their to socialism and the type of anti-excellence that Ayn Rand warned us about.
John Rovertson, East Orange, New Jersey USA
Ridiculous?? Are you kidding? You wouldn't mind if your competitors used your brand name and image to lull customers into buying their inferior products?
And please read the entire article. This isn't about sponsored versus non sponsored links. It's about Google allowing a sponsored link to Joe's Secondhand Shop to be advertised under the name Macy's.
Mike Maddox, Washington , DC
Hey Terry - you're absolutely right! Would you mind passing your extra billion over my way? - Thanks!
Bill G, Seattle, WA
I insist that all ads on my web server are server as images by my web server, and that the links are tracable to sites owned or leased by the advertiser. Furthermore, I review the image, or ad banner, as well as the page pointeed to by the link, as an unscrupulous advertiser could otherwise easily embed cyber-attack malware into either of these and use my server to serve the attack, for which I could be held accountable.
R. J. Brown, Warsaw, KY US
Ridiculous, in my opinion. Anyone who can't distinguish a sponsored link on from a so called 'organic' one on google shouldn't be using the internet.
Shaun Lazzari, Nottingham, UK
Google is going down and should go down. In Europe, google doesn't allow competitors to buy campais with competitors' names but in the US, it is allowed. How many billions does one need anyway?
Terry, Slocomb, AL