Google faces legal action over competitive bidding plan

by Staff, Brand Republic 06-May-08, 09:20

LONDON - Lastminute.com and Auto Trader are among the companies considering legal action against Google, over its plans to allow firms to bid for the brand names of rivals in search results, according to a report by Channel 4 News.

Google plans to introduce changes in the UK, which it has already launched in the US, allowing companies to advertise under the key ad words of their rivals.

Under the current system, if a trademarked name such as Tesco is searched for, results are delivered about that company at the top.

However, under the new system, rival firms could bid for the Tesco name and a search will deliver a whole list of ads for rivals.

Likewise for companies like Lastminute.com, a search under the new system could deliver results for rival travel firms.

Ian McCaig, chief executive of Lastminute.com, told Channel 4 News that Google's proposals will cost it millions and could breach trademark law. He said that if the search giant goes ahead with its plans, Lastminute is prepared to launch legal action.

McCaig said: "We believe that Google's policy change is a big problem and we object to it.

"We are investigating with vigour the legal position and if that investigation concludes positively then we will absolutely pursue a legal case, no question."

Channel 4 News says that a number of other firms are considering legal action, including the Guardian Media Group/Apax owned Auto Trader. Tesco is another that is unhappy with the change, but says it is adopting a "wait and see approach" before deciding on pressing ahead with legal action.

In a statement, it said it was "disappointed at Google's recent changes to their Trademark Policy as we think that consumers are the people who will be disadvantaged".

In response Google has dismissed complaints and it said was making the changes to improve its service to users.

Matt Brittin, Google's UK head, told Channel 4 News: "We are absolutely making this change because we believe it improves our service to users… if we do things that are right for users then we would expect to make some money out of it, but it is not something we are doing because we believe people will have to pay more for their trademark terms, absolutely not."

Comments

MARCOS RICHARDSON - 06/05/2008

Not sure how this is meant to improve the service for users? If a user wants to search for a specific brand and wants to see all possible organic and paid for listings then they get ‘other’ brands listed surly this is not what the user wanted to see!? If the user wanted to see competitive comparisons they would simply type in TESCO + ASDA or search separately for each brand and compare comments from organic listings. Its not just competing brands that will be listed there will probably be many affiliate verticals therefore even less related to the intended information sought. Our customers are now keeping between 30% and 60% of PPC budget aside just for brand protection. This rubbishes the investment in careful brand development and trade marking and makes a complete mockery of trade mark law. Marcos Richardson Director www.WebtraffIQ.com

BOB WALTON - 06/05/2008

Besides what has already been well-commented upon, I think Google are possibly misjudging "the mood". My impression is that cynicism about their motives in making this change is pretty universal and there could be support for a legal-crackdown from those who would generally take a laissez-faire approach. As Marcos Richardson implied, this is of no consequential benefit to users, that can be perceived. Bob Walton

Richard Stebles - 06/05/2008

I think this is a good thing, from a user's perspective. They don't care about any careful investment in brand development or the cost of paid-for, and Google provides the search service for them, not for companies. "[Tesco] thinks that consumers are the people who will be disadvantaged". That's laughable, and arrogant. Users who want to find Tesco, or anyone specific, will find them. However, companies need to be careful about assuming what a user is really searching for when their brand name is used. By potentially mixing up the paid-for section, Google is ensuring users who *aren't* looking specifically for anyone, but are using the brand name as quick access to relevant information, will find what they are looking for as well. It introduces more competition. I can see why Tescos might think that the consumer is disadvantaged - they might miss the chance to contribute to the benevolent empire. And on a technicality! Stupid Google.... It won't rubbish the careful investment in brand development, it will highlight just how effective that investment really was. Companies worried that consumers will choose a more compelling alternative elsewhere if they can see it need to invest in a better offering, not expensive legal proceedings.