|
ACCC alleges sponsored links misleading and deceptive |
1 August, 2007
The Australian Competition and Consumer Commission (ACCC) has commenced legal proceedings in the Federal Court against the Trading Post and Google, alleging use of "sponsored links" which appear when conducting a search of the Google search engine are misleading and deceptive.
A common practice in the digital age is for businesses to pay search engines for their website link and accompanying advertising text to appear in a particular "sponsored links" area of the search result page when consumers enter certain search terms into the respective search field. For example, a cafe may pay Google to display the cafe's website link in the "sponsored links" area on the search result page whenever a consumer types in the search term "cafe". While this practice has not been of much concern for businesses when common, generic words such as "cafe" are used, it is of great concern when businesses use trade marked terms owned by competitors.
In the present case, the Trading Post paid Google for the Trading Post website link to be listed in the "sponsored links" area whenever the terms "Kloster Ford" and "Charlestown Toyota" were searched. Both Kloster Ford and Charlestown Toyota are car dealerships in Newcastle in New South Wales, and both compete with the Trading Post for car sales. Of particular concern to the ACCC, the terms "Kloster Ford" and "Charlestown Toyota" appeared in the title of the Trading Post's sponsored link, thereby potentially causing consumers to believe the particular "sponsored link" was associated with the two car dealerships, enticing the consumer to click through to the Trading Post's website, and potentially taking away business from the "real" Kloster Ford and Charlestown Toyota.
These legal proceedings are the first of their kind to be commenced in Australia on the "sponsored links" issue. While there have been similar fact situations arising in cases in the USA, and Europe, the overseas cases have usually been conducted on the issue of trade mark infringement rather than from a consumer protection perspective. The outcome of these proceedings, while likely to take many years, will be eagerly awaited. The outcome will no doubt have major implications for search engines and businesses, especially given the significant revenue search engines such as Google earn from their "sponsored link" practice.
For further information on the orders the ACCC is seeking from the Federal Court, please click here.
Leanne Oitmaa
|
