The Australian Competition & Consumer Commission (ACCC) on Monday initiated a case in federal court accusing Trivago, a hotel comparison website, of pushing down less expensive deals for consumers unless advertisers paid an additional royalty fee.
A memo presented by the ACCC shows the website invited advertisers to pay more to block rival offers, and misled customers to believe they would get a luxurious room for a standard room price. The allegations stem from December 2016.
The fine could cost the company millions of dollars.
The ACCC claims that Trivago’s website prioritizes advertisers willing to pay the highest cost-per-click fee to rank highest in search queries on its website. The allegations date back to August 2018, which first point to the company’s television ads that lead consumers to its site. The ACCC alleged that Trivago made misleading statements to consumers in television ads and on its website, breaching Australian Consumer Law.
Norman O'Bryan, SC, representing the ACCC, told the court Monday that the first search result generally received 80% more traffic than the second result.
Trivago has been working closely with Australian hoteliers and booking platforms since 2012, helping millions of Australians research and find great accommodation deals, according to Stephanie Lowenthal, head of global communications for Trivago.
“While we acknowledge the Australian Competition and Consumer Commission’s position, we believe that aspects of its arguments are unfounded and, to that extent, we vigorously dispute the allegations relating to the information we prioritize when displaying offers on our website,” she wrote in an email to Search Marketing Daily.
Lowenthal wrote: “We’re looking forward to resolving the matter and staying focused on helping our customers find their ideal hotel.”
The company continually makes changes to support the interests of Australian consumers, Lowenthal explained. The ACCC claims some of the advertisers are excluded from serving up in query results because the bids were too low.
Changes will come with direction from James Carter, recently appointed in July to chief product and technology officer to lead hotel search. Carter previously worked at Google, where he spent more than eight years serving as an engineering director and senior software engineer. Most recently he worked on Google’s hotel ads product.
Trivago reported €223.4 million ($246.4 million) in revenue for the three months ending June 30, 2019 -- down from €235.4 million in the year ago quarter, according to the company’s financial filing. Return on advertising spend rose to 129.6% from 110.1%, respectively.
The company says it invests in search, affiliate websites, email, social, online video, mobile apps, content, display, TV, and out-of-home.