Google Down, Down Under

Not everyone is loving Google (Nasdaq: GOOG) these days. The company's paid search platform is coming under fire after an auto dealer's sponsored contextual ad began popping up in searches for rival showrooms.

If you're not familiar with Google's AdWords program, advertisers pay for the right to have their brief hyperlinked text ads appear on search engine result pages. Run just about any search on Google and you will find the ads dangling on a column to the right and occasionally in a shaded box on top of the organic results.

The Australian Competition and Consumer Commission, the country's regulatory watchdog, is filing suit against Google subsidiaries and the advertiser, alleging that the move is a deceptive business practice.

Advertising under trademarked keywords -- such as a rival company's name -- has been a thorn in Google's side before. The practice has been upheld domestically, but tighter laws in countries such as France and Belgium do not offer that kind of sponsorship flexibility.

Money is at stake, of course. All of the world's leading search engines -- Google, Yahoo! (Nasdaq: YHOO), Baidu.com (Nasdaq: BIDU), and Microsoft's (Nasdaq: MSFT) MSN -- count on their right to populate results pages with targeted ads. Losing a legal battle over that right is the equivalent of bulldozing an outdoor advertising specialist's billboards.

If Google comes up short in Australia -- the way it did in France -- it won't lead to a material shortcoming, for now. However, it sets a troubling precedent for a company angling anxiously to populate the world with its virtual bulldozers.

The throwdown Down Under may be about Australian cars, but it is ultimately about Google's own vehicle.     

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Longtime Fool contributor Rick Munarriz has never pet a kangaroo. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.