Search Engines Charged with False Advertising

By Suzy Khimm, AlterNet. Posted July 17, 2001.

Anyone who uses the Internet knows the daily irritation of spam email and flashing banner ads. But according to a new Federal Trade Commission complaint, there are far more insidious ways that corporate advertisers are manipulating our time on the Web.

Commercial Alert, a consumer watchdog organization formed by a group of activists, including Ralph Nader, filed a complaint on Monday against eight of the Web's largest search engines, accusing them of violating federal laws against deceptive advertising.

The complaint stems from the practice of companies paying to have their sites strategically highlighted or bumped up in a search engine's results. This pay for placement service is becoming an increasingly popular way to make money among search engines since the dot-com bust and the subsequent reduction in banner ad sales. The search engines Commercial Alert has accused are: MSN, owned by Microsoft Corp.; Netscape, owned by AOL Time Warner Inc.; Directhit, owned by Ask Jeeves Inc.; Hotbot and Lycos, owned by Terra Lycos; AltaVista, owned by CMGI Inc.; LookSmart, owned by Looksmart Ltd.; and iWon, owned by a privately held company with the same name.

The complaint purports that users have not received "clear and conspicuous disclosure that the ads are ads." Instead, users are misled to believe that their search results are based on relevancy alone, "like information from an objective database selected by an objective algorithm. But they are really ads in disguise."

"These search engines have chosen crass commercialism over editorial integrity," said Gary Ruskin, executive director of Commercial Alert.

Used by nearly every segment of society, search engines have become an increasingly central mode of sorting and receiving information. "With more than 2 billion pages and 14 billion hyperlinks on the Web, search engine requests rank as the second most popular online activity after email," writes the AP's Michael Liedtke.

Given these sites' privileged role in mediating facts and knowledge, there is particular concern about the impact of deceptively packaged advertising.

"We are asking the FTC to make sure that no one is tricked by the search engines' descent into commercial deception," Ruskin said. "If they are going to stuff ads into search results, they should be required to say that ads are ads."

Commercial Alert also points out that many search engine users, particularly children and teenagers, may not have the where-with-all to realize the impact and implications of commercial advertisements.

By late Monday, three of the search engines responded to inquires about the complaint, according to the AP. Two, AltaVista and LookSmart, denied the charges outright. "Based on the feedback we have received, our users are very clear about the distinctions," said AltaVista spokesperson Kristi Kaspar.

The search engines contend that their fee-paying sites are clearly labeled under special headings, such as "featured" or "partner sites," a practice called "paid placement."

Commercial Alert, however, also attacks the practice of "paid inclusion," a more insidious form of deception than paid placement. Paid inclusion allows a company to bump its site up in the results, regardless of their actual relevancy.

Not all search engines have adopted these advertising practices. Google, for example, clearly notes that its paid placements are "Sponsored Links," and it will not put paid ads within its search results.

"We have no plans for a paid inclusion program," Google spokesperson Cindy McCaffrey told SearchEngineWatch.com. "[O]ur search results represent our editorial integrity, and we have no plans to alter our automated process, which works very well in gathering information and delivering highly relevant results."

Ruskin describes the search engines' practices as "just the latest example of how advertising is creeping into every nook and cranny of our lives and culture. Americans are tired of it, and the backlash is growing."

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