Google taken to court over ads issue

13 Jul 2007

Search giant Google, including named subsidiaries in Ireland and Australia, is being taken to court by the Australian Competition and Consumer Commission over the way it sells and displays its sponsored links.

Google is being sued by an Australian body over the practice of buying adverts next to search terms.

The Australian Competition and Consumer Commission (ACCC) is alleging that Google and one of its advertisers, the Australian shopping portal Trading Post, purchased ads next to the search terms “Kloster Ford” and “Charlestown Toyota”, two of its leading competitors.

The nub of the issue is that Google failed to make it clear that these words were not “organic” search results.

“This is the first action of its type globally,” the ACCC said in a statement. “Whilst Google has faced court action overseas, particularly in the United States, France and Belgium, this generally has been in relation to trademark use.

“Although the US anti-trust authority the Federal Trade Commission has examined similar issues, the ACCC understands that it is the first regulatory body to seek legal clarification of Google’s conduct from a trade practices perspective.”

The ACCC says it has instituted legal proceedings in the Federal Court, Sydney, against Trading Post Australia Pty Ltd, Google Inc, Google Ireland Limited and Google Australia Pty Ltd alleging misleading and deceptive conduct in relation to sponsored links that appeared on the Google website.

“The ACCC is alleging that Trading Post contravened sections 52 and 53(d) of the Trade Practices Act 1974 in 2005 when the business names ‘Kloster Ford’ and ‘Charlestown Toyota’ appeared in the title of Google-sponsored links to Trading Post’s website. Kloster Ford and Charlestown Toyota are Newcastle car dealerships who compete against Trading Post in automotive sales.”

The ACCC is alleging that Google, by causing the Kloster Ford and Charlestown Toyota links to be published on its website, engaged in misleading and deceptive conduct in breach of section 52 of the Act.

It is also alleging that Google, by failing to adequately distinguish sponsored links from “organic” search results has engaged and continues to engage in misleading and deceptive conduct that breaches Australian law.

Google Australia has described the lawsuit as an attack on all search engines and vowed to defend itself.

Google has won similar cases in the US courts brought by car insurance company Geico and IT support company

The search giant lost a case in France whereby a fashion company accused the company of running links to counterfeit goods alongside legitimate results.

A US home furniture company, American Blind & Wallpaper Factory, is currently embroiled in a legal battle with Google alleging searches for the company brought up sponsored links brought by competitors.

By John Kennedy