ACCC vs Google gets bigger

The Australian Competition and Consumer Commission’s case against Google, which threatens to set a worldwide precedent on the search giant’s business model, just got bigger.

Yesterday, the ACCC revised its statement of claim to allege that the search-based sponsored links listed on the right side of the Google search results are misleading and deceptive, and in breach of the Trade Practices Act.

The additional claims follow the initial claim that the paid search sponsored links that appear at the top of Google natural search results are misleading or deceptive because they are not adequately distinguished from the natural search results. The ACCC argues that the panels the ads appear in are too indistinct and depend on the angle on which the viewer looks at the screen.

The case is also testing the legal position of companies that buy competitors names for paid search results. Telstra’s Trading Post is included in the case over a series of paid advertisements that appeared in 2005 under the name of car dealerships but that took consumers to the Trading Post website.

This legal action is the first to challenge the line between paid and unpaid search results. The labeling of sponsored links hasn’t been a big issue elsewhere, but nearly a dozen companies have sued Google for allowing their competitors to link sponsored links to their trademarks in the United States, including American Airlines. In August it sued Google claiming its ad system infringes American Airline’s extensive trademark portfolio.

Yesterday the ACCC dropped its case against Google’s Australian and Irish subsidiaries after assurances that the global company is responsible. And the ACCC lawyers got a lecture from the judge on writing a brief claim, according to newspaper reports.

The court will revisit the ACCC case on 16 November.