Google Faces Antitrust Lawsuit Due To Price Increases
In its complaint, filed with a U.S. District Court in New York, TradeComet alleges that Google raised the minimum price per click it charged TradeComet's SourceTool.com division by 10,000%, from 5-10 cents per click to $5-$10 per click. As a result, SourceTool, a business-to-business vertical search site, could no longer afford to buy as many keywords. It alleges that it now "averages approximately 1% of the traffic that visited the site prior to falling victim to Google's exclusionary conduct."
Google said it had not yet reviewed the complaint in detail. The company added: "As we have consistently made clear, the advertising market in which Google operates is highly competitive, and advertisers have a huge range of choices."
Some legal experts believe that TradeComet is likely to have an uphill battle. Other courts have dismissed similar cases brought by other disappointed search marketers, said Eric Goldman, director of the High Tech Law Institute at Santa Clara University.
"We've heard many of these complaints before. It's very common among advertisers who would like to get cheaper ads," he said. "The lawsuit assumes that there's a platonic ideal price, and that when it was cheap it was the right price, and when it went up, it was the wrong price," he added.
James Grimmelmann, a professor at New York Law School, added that even if TradeComet could no longer afford to purchase pay-per-click ads on Google, the company had other options for driving traffic to SourceTool.com.
"Search advertising isn't the only advertising out there," he said. "You should be able to buy banner ads on Web sites; you should be able to buy ads in offline publications."
What's more, Grimmelmann said, Google can argue that it raised SearchTool's minimum bid to improve the quality of search results. Many of the listings on SearchTool.com appear to be links to other Google Ads. If Google believed that users searching on the particular keywords that SearchTool had bid for would not find the landing page useful, the search company could argue that it had legitimate reasons to increase the price.
While Google's AdWords platform allows marketers to set the price they are willing to pay for search ads, the company also sets minimum prices. Those minimums often depend on an evaluation of the landing page and whether users are likely to find it relevant to the keywords they have entered into the query box.
TradeComet alleges in its lawsuit that Google "relaxes" its landing page evaluation methodology for certain partners. The lawsuit does not specify what that allegation is based on.
The lawsuit comes three months after Google's plan to power some paid search ads for Yahoo prompted the Department of Justice to threaten Google with an antitrust action. Google ultimately retreated from the Yahoo deal.
TradeComet is being represented by Cadwalader, Wickersham & Taft--the same law firm that represents Microsoft in some antitrust matters. TradeComet's lead attorney, Charles "Rick" Rule, had lobbied against the Google-Yahoo search pact.
Rule did not respond to a message seeking comment about the recent lawsuit.
It's not clear whether the Dept. of Justice's investigation into the failed Google-Yahoo deal will be relevant to TradeComet's lawsuit, but TradeComet has already brought the failed deal to the court's attention. "In November 2008," the lawsuit states, "the (Department of Justice) was a mere three hours away from filing a complaint against Google alleging, among other things, that Google has a monopoly in search advertising and that its conduct surrounding its search advertising pact with Yahoo would have further its monopoly."