FTC Lawsuits Could Hit Search Engines This Year
Recent letters sent to about 24 search engines from the Federal Trade Commission expressing concern about objectivity and transparency in ads and recommendations could result in lawsuits brought on by the government agency as early as this year, according to one expert.
"The FTC will look for blatant disregard," said Marc Roth, partner in Manatt, Phelps, and Phillips' Advertising Marketing and Media Practice, and former attorney at the FTC.
After receiving the letter that suggests unfair business practices, the companies must provide more information. Based on responses to questions, the FTC determines any violation of the law. If they determine that a violation occurred, the FTC will file a complaint, which gives the company an opportunity to settle financial penalties or injunctive relief, as well as go to court if they believe no wrongdoing occurred, according to Roth. All this can happen within six months to a year after receiving the letter, he said.
The FTC's recent letters put AOL, Ask.com, Bing, Blekko, DuckDuckGo, Google, and Yahoo as well as 17 others on notice to comply with updates taking aim at possible deceptive business practices. Those practices include not making it clear that ads served in query results are sponsored. The FTC suggests that some sponsored ads are not distinguishable from natural search results. The FTC issued guidelines to search engines in 2002, ensuring that they make a clear distinction between paid and organic listings, and recently updated the guidelines.
The FTC will take action, Roth said. Delta Airlines recently came under fire for not adhering to Cal Oppa, the California Online Privacy Protection Act. Roth explains that California didn't think through the federal aviation law that preempts state laws, so Delta moved for a motion to dismiss the action, which the court dismissed.
Roth said the FTC also doesn't have a clear answer on how to handle verbal search results in search engine queries. When Siri or Google Voice return listings for nearby pizza restaurants, it isn't clear whether the results are paid or organic listings.
Some believe the answer lives with consumers taking a responsible role for identifying the ads they click on, while Roth believes the answer lives with the consumer expectation that the search query results are fair and Yelp recommendations are honest. "Once you start compromising an expectation you diminish the relevance of the site and the reliance of the Web for providing information," he said. "As consumer confidence diminishes they stop using these sites."