Is Google Running a Scam Down Under?

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Just last week, Apple (Nasdaq: AAPL  ) drew some regulatory scrutiny Down Under over its marketing practices with the 4G iPad, which doesn't work with Australian 4G networks because of different frequency bands. The Australian Competition and Consumer Commission, or ACCC, called foul and alleged that Cupertino was misleading the locals.

Scoot over, Apple, because Google (Nasdaq: GOOG  ) is joining you in the regulatory mush pot. The ACCC is now hounding Big G over what it believes were misleading search results from years past. The results in question date to 2007, and regulators are concerned with the sponsored ads that were displayed at the time.

For example, if a user searched for a business by name, the search results could include paid advertisements by competitors, which the ACCC felt was misleading. In one case, a travel agency paid for a sponsored ad that listed the name of the competitor (so it would show up in competing results) but actually linked the user back to its own website.

This is a violation of Australia's Trade Practices Act, and the ACCC says Google should have known that the content went against the rules.

While that type of practice is certainly misleading, I think the company that took out the ad is more responsible -- Google just provides the ad platform. The lawsuit is unique because it's the first ever that holds the search engine responsible for the content of its ads, which could have implications for other search providers that operate in Australia, including Microsoft (Nasdaq: MSFT  ) Bing and Yahoo! (Nasdaq: YHOO  ) .

Google's domination is even greater Down Under, with StatCounter estimating its market share at 94.3%. Bing sits at 4.1%, and Yahoo! claims just 1.3%, so they have less to worry about anyway than Big G. On the other hand, the search giant changed the way it displays results years ago, so the ACCC is crying over milk that was spilled five years ago.

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Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple, Yahoo!, Google, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Yahoo!, Google, and Microsoft and creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On April 04, 2012, at 5:29 PM, ChanHol wrote:

    Google should most certainly be responsible. The cost, effort and burden they impose on legally registered trademark holders--while they make money selling ads to searches on those marks--is preposterous. Bravo, ACCC, well done. Stick it to 'em!

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