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Consumer Watchdog Files Complaint Against Eight Search Engines for 'Crass Commercialism'
by
Posted On July 23, 2001
Commercial Alert, a 3-year-old group founded by consumer activist Ralph Nader, has filed a complaint with the U.S. Federal Trade Commission (FTC) against eight Web search engines "for placing ads in search engine results without clear disclosure that the ads are ads." Named in the complaint were AltaVista Co.; AOL Time Warner, Inc.; Direct Hit Technologies (owned by Ask Jeeves); iWon, Inc.; LookSmart, Ltd.; Microsoft Corp.; and Terra Lycos S.A. (owner of HotBot and Lycos). "These search engines have chosen crass commercialism over editorial integrity," said Gary Ruskin, executive director of Commercial Alert (http://www.commercialalert.org).

The complaint targets two increasingly popular practices used by most of the major search engines and Web directories: paid placement and paid inclusion. Paid placement allows Webmasters to buy a specific position in search results. Paid inclusion merely guarantees that a search engine will crawl and index a page on a timely basis.

Most search engines label paid placement links with relatively clear euphemisms for ads, calling them "featured links" or "partner sites." Commercial Alert calls this practice "concealment," adding that, "This concealment may mislead search engine users to believe that search results are based on relevancy alone, not marketing ploys." Oddly, the complaint alleges that "paid inclusion is advertising within the editorial content of the search results, though it does not necessarily guarantee a certain position within the results."

Representatives from search engines named in the complaint dispute the allegations. "We've always disclosed the nature of the Featured Sites section of our page," said Bill Bliss, general manager of MSN Search at Microsoft. MSN's disclosure states that, "Featured Sites are direct links to Web sites from MSN.com and MSN sponsors. In some cases, Microsoft accepts payment in exchange for these listings." MSN's Bliss added, "If the FTC chooses to pursue this investigation, we will of course cooperate fully."

AltaVista spokeswoman Kristi Kaspar said, "We are confident in our implementation of our text ads and have received positive feedback from our users since the program has been live."

Conspicuously missing from the complaint are other major search engines, including Google and GoTo, both of which offer paid placement. These aren't targeted by the complaint because Google identifies purchased links as "sponsored links" and GoTo's paid links display the cost to the advertiser for each link.

While labeling paid links more explicitly may be a good idea, the overall morally smug tone of the complaint seeks to paint search engine firms as rapacious capitalists, more concerned with making money than with providing a good user experience. Several glaring inaccuracies and misrepresentations in the complaint reveal bias that belies mere "consumer protection" as a primary motive for the action.

For example, the complaint alleges, "During the last year ... some search engines sacrificed editorial integrity for higher profits." I'm sure that's news to AltaVista, whose parent company CMGI just reported nearly a $1 billion quarterly loss on the heels of the previous quarter's $2.9 billion loss. Ask Jeeves and LookSmart have also reported losses.

The complaint also draws a dubious comparison between television infomercials and search engine paid links, noting that the FTC ruled "the infomercials were deceptive in that they purported to be independent programming rather than paid ads." A more apt comparison, perhaps, might be with telephone directories—real-world finding aids similar in purpose to search engines that most people aren't likely to mistake for prime-time content.

A quick glance at the local white pages reveals hundreds of listings in boldface or large type, which are obviously paid placements. The distinction is even greater in the yellow pages, with some listings occupying an entire page. In neither case are these obvious "paid placements" labeled as ads. In fact, the phone books don't even bother with the "preferred" or "featured" labels that the search engines use to differentiate ads.

Finally, the complaint uses a selective quote from SearchEngineWatch.com editor Danny Sullivan and disingenuously misinterprets his words as supporting collateral to drive home a point. The complaint states: "‘It's getting very difficult to tell whether a site paid to be listed or not,' Danny Sullivan, editor of Search Engine Watch, told The New York Times. If experts like Mr. Sullivan cannot easily figure this out, it is unlikely that other search engine users can tell whether any particular search engine result was a paid ad or not."

Implying that Danny Sullivan can't figure it out is patently ludicrous. Using deceptive tactics like co-opting the comments of the industry's leading expert and using them in a narrower, altered context than originally intended seriously undermines the credibility of the complaint.

Commercial Alert deserves credit for raising awareness of paid placement and paid inclusion in Web search engines. Labeling paid links more clearly would help searchers clearly distinguish between purchased and computed results, and, as Google and GoTo have demonstrated, probably wouldn't hurt traffic at sites like iWon, Lycos, or AOL Search.

But the Commercial Alert complaint naively brushes aside the business realities of running a search engine. It costs millions of dollars to purchase and maintain the massive computer systems and network bandwidth required to provide a comprehensive Web search service, not to mention employing the specialists who make the operation work.

Several of the companies named in the suit—far from seeking "higher profits"—are in precarious financial straits. Tolerating a few ads near the top of search results is a small price for searchers to pay, if the alternative is for the search firms to run out of money and shut down completely.

Commercial Alert's anti-business, quasi-socialistic agenda with this complaint clearly transcends the noble goal of simply helping consumers. For all its merits in raising awareness of an important issue, this complaint should be regarded by all Web users, and, hopefully, by the FTC, with a healthy dose of skepticism.


Chris Sherman is president of Searchwise, a Boulder, Colorado-based Web consulting firm, and associate editor of Search Engine Watch.

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