Australian regulator in world-first court action against Google over sponsored links

[see below for the ACCC news release]Australia’s consumer watchdog launched legal action accusing Internet giant Google of misleading web users Thursday in a case that analysts said would “send a shudder” through the global IT industry.The Australian Competition and Consumer Commission (ACCC) alleged Google has misled users by misidentifying sponsored links that appear on its results page, a major source of income for online search engine providers.The ACCC also demanded Google stop publishing search results that failed to distinguish between paid advertisements and “organic” results.”The ACCC is alleging that Google, by failing to adequately distinguish sponsored links from ‘organic’ search results, has engaged in and continues to engage in misleading and deceptive conduct,” the regulator said in a statement.http://www.smh.com.au/articles/2007/07/12/1183833666884.html (AFP)
http://www.smh.com.au/articles/2007/07/12/1183833667378.html (AAP)
http://www.zdnet.com.au/news/software/soa/Google-denies-ACCC-s-deceptive-conduct-charges-/0,130061733,339279920,00.htmAlso see the ACCC news release:
ACCC alleges misleading and deceptive conduct by Trading Post and GoogleThe Australian Competition and Consumer Commission 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 also 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.Further, the ACCC is 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 in breach of section 52 of the Act.The ACCC is seeking:

  • declarations that Trading Post contravened sections 52 and 53(d) of the Act
  • declarations that Google contravened section 52 of the Act
  • injunctions restraining Trading Post from representing through sponsored links an association, sponsorship or affiliation with another business where one does not exist
  • injunctions restraining Google from publishing sponsored links of advertisers representing an association, sponsorship or affiliation where one does not exist
  • injunctions restraining Google from publishing search results that do not expressly distinguish advertisements from organic search results
  • orders that Trading Post and Google implement trade practices compliance programs
  • an order that Google publish a notice on its website outlining the above, and

costs.The matter has been listed for a directions hearing in the Federal Court, Sydney, on 21 August 2007 before Justice Allsop.This is the first action of its type globally. 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.http://www.accc.gov.au/content/index.phtml/itemId/792088/fromItemId/142

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