Google's Keyword Practices Draw MLS-style Heat

Written by Posted On Monday, 20 March 2006 16:00

It's amusing to see an entity besides the real estate industry take heat for its business model.

Questions have been raised recently about the way Google ranks Internet sites for searches, raising speculation about whether or not Google will be forced to change its business model.

Two trends are under scrutiny -- that Google sells trademarked words to competitors who pay for keyword searches, including the names of competitors' businesses. That puts them on top of the trademark holder.

The second trend is that Google can banish sites from its search results whenever it wants.

So far in the U.S., Google has gotten away with it by claiming its search ranking formula is protected by the First Amendment. A lawsuit filed against Google by rival SearchKing in Oklahoma City was thrown out when U.S. District Judge Vicki Miles-LaGrange agreed with Google.

But, in France, Fabrice Dariot's travel agency, Bourse des Vols, has "successfully challenged Google's practice of selling Internet advertising from rivals designed to appear with Web searches for his trademarked website name, Bourse des Vols, which means flight exchange," says reporter Doreen Carvajal in her story, "Growing Numbers of Lawsuits Could Hurt Google's Ad Revenues" for The International Herald Tribune.

Realty Times was among the first news services to report the practice that trademarked names were being sold to competitors on Google.com way back in 2001.

What happens is that a consumer uses a keyword for his or her search which can include the trademarked name of a company such as John L. Scott Real Estate. At the time, the results brought up HomeGain and other lead-generation sites, whose business models are based on selling Internet leads to agents. CEO J. Lennox Scott was outraged and wrote Google to stop the practice.

But in 2004, Google abandoned its policy of protecting trademarked names. The reason? Keyword advertising, writes Carvajal, is "the main source of revenue for Google, which posted $3.19 billion in sales in 2004, largely through charges of a few cents each time a user clicks on an ad."

That means that Google is taking a calculated risk that paying off lawsuits like Dariot's will be a cost of doing business -- much less expensive than changing its business model. Dariot was awarded only $97,000 in damages, and there are as many as 15 more cases pending against Google in France, and from some very high-profile French brands -- Moët Hennessy and Louis Vuitton, which won its case in February, says Carvajal.

So far, Google has been able to retain its right to use trademarked words in keyword sales to advertisers, but the tide may be turning. In related news, Google may be forced to reveal its top-secret formula, or algorithm for ranking websites, because some sites are complaining that they are being banished from Google without cause.

KinderStart, a website devoted to information about children, claims, "Google has engaged in anticompetitive behavior and misled the public by positioning its search engine as an objective source for finding Internet content. The suit seeks unspecified financial damages and a court order that would require Google to change its ways."

PageRank is the name of Google's page ranking system which has a top-secret formula for measuring the popularity and value of a particular website. The advantage to consumers is Google's relevance in results -- if you put in a keyword, you'll likely get the results you're seeking. This has made Google the most popular search engine world-wide.

But the system also creates an incentive for advertisers to start paying to guarantee results. If a page drops from first-page relevance in the rankings, it could hinder business significantly, as KinderStart has claimed. KinderStart said its traffic plunged by 70 percent after Google dropped it.

The thing is -- all that traffic was free -- but they're mad, anyway, because Google won't disclose how it chooses sites, or allow sites an appeals process to get back in its good graces so it can get more free advertising.

KinderStart's civil complaint, filed in U.S. District Court in San Jose, Calif., is seeking "to be certified as a class action representing the owners of all websites blacklisted by Google's Internet-leading search engine since January 2001," says the Associated Press.

Just like the government, banks and third-party lead generation suppliers believe the MLS should be a free public utility because of its importance to the gross domestic product, the same arguments are being used against Google.

Gregory Yu, a lawyer for KinderStart, says Google has engaged in anticompetitive behavior and misled the public by positioning its search engine as an objective source for finding Internet content. The suit seeks unspecified financial damages and a court order that would require Google to change its ways, says the AP.

To win the case, Yu hopes to prove Google has become an "essential facility" that should be required to warn websites before dropping them from the index, reports the AP.

"We don't really feel there is enough transparency and openness in a service that has become so important," Yu said.

Maybe Google should be required to become a public utility, like so many are demanding should happen with multiple listing services.

The question is -- who will pay for the enormous database? That's a question that hasn't been answered in the real estate industry -- or by Google critics.

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Blanche Evans

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