[LINK] SMH: 'Vanishing up each other's google'

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