Deceptive Advertisement in Search Engines

When using Internet search engines to look for information, we generally expect that the search results are reasonably relevant to our search query on an objective basis. What if, however, some results are included or placed higher up in the list because someone paid for such a priority result? This would fundamentally undermine the credibility of search results, unless such manipulation was duly revealed to users. These days, as increasing number of people use search engines for online commerce transactions and as online sellers (including online content providers) are willing to pay for traffic from search engines to their websites accordingly, this concern is gaining more attention in relation to search advertising.

One of the most popular Internet marketing techniques, search advertising is “the practice of search engines selling advertisements that are triggered to appear in search results generated when a user types in certain keywords.”[1] Search advertising is greatly important for online marketing as an increasing number of customers are using search engines to find goods and services to purchase. In 2019, the total spending for digital media advertisements will likely overtake that for traditional media, with a rapid increase of search advertisements contributing to this trend.[2] Search engines make a huge profit out of this search marketing business. For example, Google’s search marketing revenue was reportedly around $34 billion in 2018.[3]

This concern was raised quite a long time ago. In July 2001, Commercial Alert, a consumer advocacy non-profit organization, filed a complaint before the Federal Trade Commission (FTC), arguing that Alta Vista Co. and 6 other search engine companies had deceived users by not distinguishing advertisement from regular search results, thus violating Section 5 of the FTC Act, 15 U.S.C. §45(a)(1), which prohibits “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.”[4]

In June 2002, the FTC responded to this complaint by publishing “2002 FTC Search Engine Letter” that recommended search engines to clearly distinguish advertising from regular search results.[5] More specifically, the 2002 FTC Search Engine Letter required search engines to disclose whether a result is a “paid placement,” which exposes advertiser’s information in a higher ranking in a search result, or a “paid inclusion,” which includes advertiser’s information in a search result when it might not have been included without advertising fee.

In June 2013, in response to technological and commercial changes in digital media and to search engines’ declining compliance with 2002 FTC Search Engine Letter, the FTC published “2013 FTC Search Engine Letter,”[6] which updated the 2002 FTC Search Engine Letter by encouraging search engines’ use of visual cues (e.g., prominent shading with a clear outline) and text labels in order to effectively distinguish advertising results. The 2013 FTC Search Engine Letter was sent to general-purpose search engines, such as Google, and other e-commerce companies that adopt search engines for their specialized business areas. In December 2017, FTC published a staff report that summarized its research on deceptive search advertisement in 2014 and 2015.[7] In this report, FTC introduced its empirical study that compared a test group of consumers’ reaction to search engine advertisements without anti-deception techniques to another test group’s reaction to the same advertisements with such techniques. It concluded that the anti-deception techniques that the FTC recommended in its in 2013 Search Engine Letter can substantially mitigate consumers’ confusion relating to searching advertisement.

The Victory Media Case may be helpful to understand this issue more practically[8]. Victory Media Inc. is a media company that offered media brands, survey and ratings programs, reporting services, and training through its magazines, websites, and social media platform. According to the FTC’s complaint, post-secondary schools paid Victory Media Inc. for their marketing to military consumers, and Victory Media Inc. allegedly deceptively promoted post-secondary schools as military-friendly schools, some of which were not military-friendly. Therefore, the FTC prohibited Victory Media Inc. from such conduct and required Victory Media Inc. to disclose all of its material connections with the schools paying for such promotion.

As the FTC mentioned in its Sample Letter to Specialized Search Engines attached to 2013 FTC Search Engine Letter, anti-deception techniques that FTC recommended to prevent potential deception of consumers may need to be tailored in accordance with business models of each search engine. Aaron Burstein, for example, asserted in Search, Advertising, and Online Distribution: Practical Guidance and Open Questions under FTC Standards, Intellectual Property and Antitrust (2018), “The FTC’s existing guidance does not address the full range of business models or fact patterns that could arise in uses of search in connection with advertising”. In order for search engines to conduct their business without a concern of deceptive advertisement, the FTC needs to provide more concrete and comprehensive anti-deceptive search advertising guidance to address various business models adopted by search engines.

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