TECHNOLOGY SPECTATOR: Googling deception

When the ACCC reprimanded Google for deception with its AdWords system in Australia this month it opened a can of worms around Google's primary source of revenue.

Technology Spectator

Earlier this month the Federal Court found Google’s conduct in response to a user’s interaction with Google’s search engine was misleading and deceptive.

The Australian Competition and Consumer Commission initiated proceedings against Google. One aspect of the ACCC’s case was that Google, in failing sufficiently to distinguish between ‘organic’ and ‘sponsored’ results relating to advertisers, engaged in misleading and deceptive conduct contrary to section 52 of the Trade Practices Act 1974 (the Act).

When keying in a search term, Google returns organic search results, which is information displayed free of charge as well as sponsored links, which are advertisements that look and feel the same as organic results but which rank higher on the page and have a slight yellow background.

The court found the most obvious example of misleading and deceptive conduct was the sponsored link after entering 'Harvey World Travel'. A user enters those keywords because they are seeking information about Harvey World Travel. Instead, the user is given the URL of one of Harvey World Travel’s competitors in a sponsored link. In this example, the user is not told merely that the advertiser has provided Google with this URL. Rather, Google tells the user that the URL provided is the contact address for information about Harvey World Travel. Interestingly though, Google provides the actual URL for Harvey World Travel in the organic search return located lower on the page.

Google’s position is that they are not responsible for the misleading effect of the displayed response because it is obvious to the user that Google is no more than a conduit for the advertiser. However, in each instance the court found:

1) Google created the message which it presents;

2) Google’s search engine calls up and displays the response to the user’s enquiry, and;

3) It is Google’s technology which creates that which is displayed.

The role of ‘creative maximisers’ and other Google personnel who liaise with customers is a feature of the process by which advertisers participate in the AdWords program. These maximisers create great value for Google through revenue from users clicking on sponsored links. This active involvement by Google staff cemented the court's decision and meant Google could not use "the publishers defence” as provided by s 85(3) of the Act.

Google’s revenues (about $38 billion last year) are derived primarily from advertising via AdWords and the promotion which appears on Google websites as sponsored links which, when they appear, are located above organic search returns. According to separate estimates from Adometry and Anchor Intelligence, in the first three months of 2010, 17 per cent to 29 per cent of clicks to online ads were fraudulent. That’s up from 15 per cent to 25 per cent in the first quarter of 2009. Such fraudulent activity is courtesy of botnets – networks of infected PCs – which are directed to repeatedly click on the ads. This is bad news for companies buying AdWords as they are paying for bogus clicks, bad news for consumers who pay higher prices as a result of companies passing on their costs, but great news for Google, which makes money regardless. Botnets threaten the online environment that society relies upon for communication, commerce and collaboration.

Last August, Google admitted to knowingly running ads for online Canadian pharmacies targeting consumers in the United States and paid $500 million to avoid criminal prosecution. The US Federal Trade Commission has this month proposed fining Google $25,000 for deliberately obstructing their investigation into whether the company violated federal rules when its street-mapping service collected and stored data from unencrypted wi-fi networks in 2010. The European Commission, Europe's antitrust regulator, will decide this month on the next steps in its probe into the dominance of Google’s search.

Google argue they are an information retrieval system designed to navigate the voluminous information across the web using keywords or queries. It is plain they put profits before consumer interest or regulatory oversight.

Nigel Phair is director of the Centre for Internet Safety at the University of Canberra