[LINK] SMH: 'Vanishing up each other's google'
Roger Clarke
Roger.Clarke at xamax.com.au
Wed Jul 18 09:09:02 AEST 2007
[Here's Alan Kohler's typically pithy take on the case being run by
the Australian competition regulator ACCC against Google.
[Kohler says "the newsletters probably only make a profit from
renewals in the second year - in the first year virtually the whole
price of a new subscription goes to the Google machine ". The
subscription fee for his newsletter is $295 p.a. Among his
competitors, the Rivkin Report costs $799 p.a.and the cheapest
subscription for ASR is $890.00 p.a. That would be a lot of money
for customer acquisition, and it would go straight into Google's
coffers.
[I particularly like the twist inherent in the article, which is
almost self-referential, and a great study in that wonderful oxymoron
'business ethics': it's a reasonable presumption that Kohler is paid
by the Herald to publish his column - he is, after all, the most
lucid of the mainstream business commentators in Australia. But he's
used this issue as a direct advertisement for the service he runs.
Vanishing up each other's google
Date: July 18 2007
The Sydney Morning Herald
Alan Kohler
http://www.smh.com.au/text/articles/2007/07/17/1184559788867.html
IF YOU google the phrase "Alan Kohler", the top link in the main,
unpaid search results is one of my articles on smh.com.au. Next is
Eureka Report. But above that, against a beige background, there are
two other links - one is to Eureka Report and the other is a link to
Australian Stock Report (www.australianstockreport.com.au), one of
our competitors.
Australian Stock Report has bought the Google phrase "Alan Kohler".
Eureka Report's link only sits above it in the section headed
"sponsored links" because we have paid more for it (to Google) in the
auction system known as search engine marketing (SEM).
Over to the right, in another sponsored links section for the search
on the phrase "Alan Kohler", there's a link to
www.stockresource.com.au - another competitor - and under that are a
couple of book sites trying to flog my books (booktopia and ebay).
Ebay buys millions of keywords, and among other things competes to
buy just about every author's name. We have also bought the phrase
"Eureka Report", of course, but if you google that then six
competitors' links appear in the sponsored links section of the
results. They have all bought the phrase "Eureka Report", but once
again we have paid the most so we can be at the top. I hasten to add
that we are also playing this rather brutal little game: we have
bought, among things, the phrases "Rivkin Report" (another
newsletter) as well as "Australian Stock Report".
Each of those newsletters ensures that its link is at the top of the
Google sponsored links by paying the highest price. But Australian
Stock Report's search result, for example, is crowded with 10
competitors that have also bought its name.
Thus do all of the financial newsletters compete with each other to
throw money at Google.
Another way to put this is that, when it comes to subscriptions
obtained via Google marketing, the newsletters probably only make a
profit from renewals in the second year - in the first year virtually
the whole price of a new subscription goes to the Google machine.
This is the essence of the Australian Competition and Consumer
Commission's case against Google for misleading and deceptive
conduct, which caused a flurry of feather fluffing and squawking in
the global internet henhouse last week.
The case began with Trading Post's purchase of the keyword
"Stickybeek", which is the name of a small Newcastle-based used car
website. Search that word on Google now and there are no sponsored
links at all, which means Stickybeek is getting its search engine
position for free, because it's at the top of the free results.
That's because Trading Post gave up quietly once it was pinged. The
other case cited by the ACCC in its court documents is instructive:
it's the fact that if you google the phrase "Harvey World Travel" you
get a sponsored link to one of its competitors, STA Travel, and a lot
of people surveyed by the ACCC did not realise that these businesses
were not connected - were competitors, in fact. The ACCC, it seems,
is outraged about this.
Actually this outrage is based on a misunderstanding of how search
engines work. STA has not bought the phrase "Harvey World Travel" -
it has bought the word "travel", which is perfectly OK. Its link
appears because "travel" appears in Harvey World Travel's name and
search engines look for links to each word in a phrase as well as the
whole phrase itself.
You can tell this because if you put quote marks around "Harvey World
Travel" when searching it, which turns the whole phrase into a single
word, no sponsored links appear at all - no sign of STA.
So the highly competitive newsletter business is definitely a better
example of what the ACCC is on about.
In essence the ACCC claims two things: a business's competitors
should not be allowed to "buy" its name and muscle into its search
results page; and the "sponsored links" are not sufficiently
distinguished from the main, unpaid, results in the middle of the
page. The ACCC is not saying this, but I think it would accept a
settlement based on the latter point, and not press on the first. In
other words, Google could probably end the case with more prominent
signage on its sponsored links.
But Google denies there is a problem at all, and it is supported in
this by Peter Coroneos of the Internet Industry Association and just
about every other geek in the country.
It says the paid ads are clearly marked "sponsored links" and the one
across the top has a beige background, which further distinguishes it.
On the question of competitors buying each other's names, Google says
it does not monitor this and given the billions of searches going on
every day it would be impossible to do so.
Google then shoots its own argument down by referring to its "AdWords
Trademarks Complaint Procedure", which allows a business to apply to
have its trademark protected from competitors buying it. Obviously if
it were impossible to monitor these things, then this procedure would
not work either.
In any case, the complaint procedure is only available on google.com,
not google.com.au. And it's buried deep under "about Google", then
"contact us" - there are no signposts how to get there. It's fair to
say no one would find this unless they were told where it was.
And who can blame Google? Competitors bidding against each other at
auction to buy their own names as well as each other's names is no
doubt a big part of the company's revenue. Yes, but is it fair and
reasonable?
The system of sponsored links is based on a 2002 ruling by the US
Federal Trade Commission that basically approved it. Now the
Australian regulator has asked The Hon James Leslie Allsop, judge of
the Federal Court of Australia, to update this US ruling. Should be
fascinating.
Alan Kohler publishes Eureka Report, an investment newsletter
financially backed by Carnegie Wylie & Co. The views expressed here
are Kohler's alone.
ak at eurekareport.com.au
--
Roger Clarke http://www.anu.edu.au/people/Roger.Clarke/
Xamax Consultancy Pty Ltd 78 Sidaway St, Chapman ACT 2611 AUSTRALIA
Tel: +61 2 6288 1472, and 6288 6916
mailto:Roger.Clarke at xamax.com.au http://www.xamax.com.au/
Visiting Professor in Info Science & Eng Australian National University
Visiting Professor in the eCommerce Program University of Hong Kong
Visiting Professor in the Cyberspace Law & Policy Centre Uni of NSW
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