FTC Tells Search Engines to Disclose Paid Links

linderdm writes "CNN has an article describing how the FTC wants search engines who receive payment for higher rated links, to disclose this to users. The concern is that users go to search engines looking for the best results for their search criteria, not the highest paid results for their search."

Comments

that's great!

[squarefish]

It's been a long time coming. Google is the only engine currently doing a decent job of making clear which links are paid advertisements.

Will Slashdot be required to do the same?

[king_ramen]

I guess not since we all know this site it suspect before we get here.

Stacking engines based on being paid...

[gatesh8r]

This is really good that the FTC is putting their foot down on this. Why? Being able to let users understand what is relevant to their search instead of all this corperate clutter and pay-offs that may or may not even be relevant. One thing that I do want to see more and more out of government groups is the further pushing of truth in how search engines index and give relevancy -- that is, what people are looking for, not "Click here and buy NOW!" Personally this should only help engines get more traffic -- like how google does things.

Re:Stacking engines based on being paid...

[Disevidence]

If they're really into this for the consumer, then they should be investigating spyware and malicious web-pages under their jurisdiction.

While this is good news for helping net newbies, i don't think they did this for the consumers. Probably a few well-known companies were a bit pissed off that search engines linked to competitors over them.

But if they are in it for the proper reasons, more power to them, and start addressing spyware.

There's a very simple solution

[quantaman]

The very first time you visit a search engine you will have to sign an EULA that says (in 5000 words;) that you understand there are paid links and agree that they will be hidden. I'm sure the search engines won't mind...

No Action?

[Wanker]

While the FTC said it doesn't plan to file suit against the search engines, it will send a letter to each calling for "clearer disclosure of the use of paid inclusion, including more conspicuous descriptions of paid inclusion itself."

Somehow this reminds me of Aliens where Frost says: "What the hell are we supposed to use, man? Harsh language?"

I guess I would have liked to see the FTC at least say "we plan to make this illegal" instead of:

Regulators said there is no determination the search engines broke the law, and it plans no other action.

oh really?

[NASAKnight]

"When the search engines show that ads are ads, we're hoping consumers will flee these search engines," Ruskin said.

Do they really believe that? The average joe really isn't going to care, and he probably thinks that if a site can afford to pay the search engine, it must be good.

Does the FTC have jurisdiction?

[BitterOak]

Does the FTC really have the authority to do this? Are there First Amendment implications?

If I accept advertising on a personal website, am I required to disclose the fact?

Perhaps the reason the FTC is not taking legal action here is there is no legal basis for them to. Under which law would they sue?

I'm not a lawyer, but I am genuinely curious about the legalities here. Any lawyers or other experts care to respond?

Re:Does the FTC have jurisdiction?

[anthony_dipierro]

Does the FTC really have the authority to do this?

Yep, it's interstate commerce.

Are there First Amendment implications?

Yeah, but commercial speech has limited protectionunder the First Amendment.

Under which law would they sue?

Not sure, but it seems that it could fall under fraud, or unfair trade practices, or something. The FTC probably has leeway to invent its own rules, as well.

Re:Does the FTC have jurisdiction?

[Syntari]

IANAL either, but for what it's worth:

Section 5(a) of the FTC Act (check Cornell law school's helpful online United States Code at 15 U.S.C. section 45(a)) prohibits unfair or deceptive acts or practices in or affecting commerce. Omission of a material fact can be deceptive if the facts that are revealed are misleading in the absence of the omitted fact. If the words "search engine" (and the other text appearing on the engine's web site) lead most people to believe that the sites are ranked solely by relevance, then omitting the fact that some less-relevant sites are bumped up in return for a fee paid to the search engine could be misleading. What is "material", you ask? Well, nobody really knows for sure, but a typical formulation is "anything which significantly changes the totality of information available to the consumer" (to paraphrase a Supreme Court ruling in the securities law context), or "anything which a reasonable consumer would like to know in making his/her decision to use that particular search engine".

First Amendment implications? Sheesh. Do you think Land'O'Lakes _enjoys_ disclosing the number of calories in a butter stick? Or that RJ Reynolds puts "Surgeon General" warnings on its cigarettes as a marketing ploy to appeal to the subconscious deathwish of the nihilistic Gen X? Or that troubled businesses disclose profit warnings in order to attract investors? They disclose these things because they are forced to, because failure to do so would expose them to potentially massive liability. That is no different from forcing a search engine to make a disclosure about its sorting algorithm. No First Amendment problems in preventing fraud...

Stupid Idea

[Deltan]

This is a retarded idea. Here's why. The more the government interferes with business, particularily online business the less of a free market it actually is. If in fact it is important that users see what is relevant before paid results then the marketplace will change to demand that from search engines. Consumers will flock to what they want to use. The fact that the majority of Internet Cattle are made up of stupid people shouldn't really factor into this at all. People should find out for themselves how search engines work, people shouldn't have to rely on the government to protect them. In the famous words of Jesse Ventura, "The government is not your mom!"

If a privately owned search engine wants to get money for prioritized links, more power to them, that's free enterprise, it is their perogative to do business that way! If users dislike it they will go elsewhere and that search engine will be out of business. That's how the market works, the government doesn't need to interfere at all, the government is not your mom!

Re:Stupid Idea

[yali]

The more the government interferes with business, particularily online business the less of a free market it actually is.

This criticism doesn't work even from a pro-free-market perspective. Free markets depend on informed actors. If you really believe in free markets, then the government absolutely has an obligation to ensure that economic actors can base decisions on reliable information. (See WorldCom, Enron, Xerox, et al.). The more consumers know, the better the free market works.

Re:Stupid Idea

[nhavar]

Your sorta right. There's still a flaw though. Lets assume that I go to searchX for all my search needs. Soon I start to notice that the first link I click on never really deals with the issue that I'm searching for but is usually just pushing a product. After repeating this process a few times I begin to learn that if I go to the second page of the result set I actually get closer to the things I'm looking for. Soon I'm no longer even glancing at the first page I'm going directly to the second or third page. Websites and search engines would do well to learn from the failures of their material counterparts the magazines and broadcasting industries.
Most people pick up a magazine and flip directly to the article they're interested in bypassing 90% of the advertisements. This has caused magazines to start intermingle half a page of content with half page ads to get the user drawn to the ad. The saturation of ads in the market place has caused the consumer to become desensitized causing ads to become less effective until a "new medium" of ad space can be found and then saturated. We've already seen that the web has reached it's saturation point. Unfortunately noone is learning. The marketing companies and companies funding them continue to put so much revenue in to ad streams that they could fund most small countries. The drug companies put more money into the stream than Nike and Budweiser and yet the primary way that consumers come to know their product is still via word of mouth or person to person representation. If a stock had such low returns most people would dump it and the company would go bust. But the marketing just keeps going up and up.

Sales slump, more money into marketing, price goes up to cover sales loss and new marketing funding - sales slump. It's a circle usually only broken by upswings in the economy or by product advancement.

I think that the government should focus on making sure that the college educated marketing firms have legitimate diplomas. I'm sure there's a little guy in a back room churning those things out by the thousands.

Good for me? Sure. Fair? No.

[Schmelter]

I'm going to let you in on a dirty little secret I'm a Republican. You can flame me for this later. But being a Republican, I believe in the independence of the people from the government, and extend this independence for corporations as well. I believe in a fair, and open marketplace free of monopolies, which is exactly what the FTC was setup to enforce by enforcing the Sherman act of 1890. So, as a whole, I'm pro FTC.

This however, oversteps their bounds. What are they doing telling a non-government related business how to advertise, or what to put on their website? Don't they have a certain aspect of freedom of speech when it comes to composing and editing their websites as they see fit?

Now, of course I'm against any corporation defrauding the public as to what they do or how they operate, but is saying that a link was paid for really fraud? Yeah, it sucks that they can lie to you, but anyone can lie to you, it's your responsibility to be paying attention, not the government's to make sure that lies don't happen.

Now I'm not insane, I'm glad that I'll know that a particular link was a paid advertisement, but do we have to go to the lengths of legislating such a thing? Cut the red tape already...

Re:Good for me? Sure. Fair? No.

[MillionthMonkey]

This however, oversteps their bounds. What are they doing telling a non-government related business how to advertise, or what to put on their website? Don't they have a certain aspect of freedom of speech when it comes to composing and editing their websites as they see fit?

This is a simple application of truth in advertising laws that have applied to other media like newspapers and TV for a long time. That's why drug companies have to ruin those pretty commercials with talk about all those nasty effects like diarrhea and vomiting. "And if your immune system is not normal due to advanced HIV infection, make sure your doctor knows to avoid a possible complication! Improvement was similar in patients that took a sugar pill." They try to distract you with high pressure flowers / colors / babies / fields / pretty people, but they have to say this stuff- it's the law. One type of ad that appears often in newspapers uses the format of a fake newspaper article- like "Amazing New Investment Makes Investors Rich". They try to make the fake article look as much as possible like the other, real articles. When they do this, they have to put the word "ADVERTISEMENT" in the corner, so you know it's an ad and not a real article. If you show a commercial with fat people turning into thin people, or poor people turning into rich people, you have to show "Results Not Typical" on screen. It's been that way for years without anyone making a stink about their First Amendment rights being violated. If you're going to advertise to me you'd better tell me what you're doing. You have the right to say anything you want but you have no right to deceive and there are laws in place to protect the public that prevent you from doing it.

Now, of course I'm against any corporation defrauding the public as to what they do or how they operate, but is saying that a link was paid for really fraud?

No, fraud is not saying that a link was paid for when it was.

Yeah, it sucks that they can lie to you, but anyone can lie to you, it's your responsibility to be paying attention, not the government's to make sure that lies don't happen.

Ha ha ha, yeah. "It sucks they can shoot you, but anyone can shoot you, it's your responsibility to be paying attention, not the government's to make sure that nobody gets shot." Uhh, I think it is the government's responsibility to regulate fraud. What are the responsibilities of government supposed to be, then? To maintain a standing army, and nothing else? You must be a troll. It fits with the big deal you make about being a Republican and how of course people are going to flame you for being a Republican.

Now I'm not insane, I'm glad that I'll know that a particular link was a paid advertisement, but do we have to go to the lengths of legislating such a thing? Cut the red tape already...

The FTC hasn't even said the sites broke the law. They're sending out a letter saying hey, point out your paid links, we don't think you should hide the fact that these are paid links if you are going to call yourself a "search engine", because that is not what a search engine does. The search engines show every indication that they will comply, and it looks like this story is over. The FTC did its job. The current no-bullshit standard for a "search engine" was preserved. The Internet's value as a public resource was conserved. And as even you yourself note, you're glad that you'll know if a particular link was a paid advertisement. So what is your problem? What is your point? Any regulation is evil?

Google's Method

[Bilbo]

I have to say I really like the way Google does sponsored links. They are right there, up at the top, clearly marked. That way, if I want to go to the sponsoring site, I can, but with the full knowledge that they were probably not selected because they were the "best match" to my query, but because they paid for the spot. If I go there, then I'm probably looking to buy something in the first place, and I'll be much more likely to spend my money.

On the other hand, if I don't want to go to a site that will most likely be wanting to sell me something, then I don't have to.

Seems like it's the best solution all way round.

sorry, they have a what?

[Coolfish]

CNN has an describing

a monkey? A chicken? hold on... wait a second, a .. an article! Yes!! Yes an article! CNN has an article! Written by a monkey. As such, it's completely classified and we cannot give a link.

In other news, CNN reports that, and so you really should wear lead underwear during the next few days.

Truth in advertising?

[tlambert]

Yeah, it's annoying when a web catalog business pretends to be a search engine, but instead of returning "best match" returns "catalog item #53715".

With the current state of affairs, you have something that looks like a gas station, is labelled like a gas station, has credit-card operated pumps like a gas station, and, after you insert your credit card, pump a tank full, get billed, and go to start your car, you find out they are actually selling chocolate syrup, but pretending it's gas, because no one wants to buy chocolate syrup.

I think that this is as necessary as the little label bars with "Advertisement" in them above and below fake magazine articles in magazines these days.

-- Terry

best use of their time?

[frovingslosh]

We can't get our gub'mint to outlaw spam, but they can spend their time telling search engines how to do business! Sure, I think this info should be disclosed too, but on a priority basis there are a lot of other things I would rather see the effort spent on, and I'm not sure what legal basis they have to tell a site how to present links.

As long as the site isn't outright claiming that they don't bias searches based on 'ad revenue' (payola), I don't see that they have done anything wrong in doing it. Could be an unwise move to do it if there is a public backlash, but it doesn't strike me as anything that tax paid "public servants" need to stick their nose in.

Re:Totalitarians begin small

[Bilbo]

If we let them get away with this, it's one fast ride down a greased up slippery slope to control of information on the net.

Please check to see that your brain is in gear before letting your mouth run off.

The FTC isn't saying anything about how these corporations can conduct their business, or how they do their rankings, or who they accept money from. They aren't forbidding search engines from making money, or placing some sites ahead of others based on how much they have been paid.

All they are saying is that, when the results are presented to the customer, "matches" which are made primarily based on sponsorship are simply marked as such, so that the customer is able to make an informed choice.

What about other types of "search"?

[callott]

One of the major online travel sites will quite happily skew "lowest fare" flight search results towards a certain airline as long as said airline is willing to pay them a modest monthly fee. (I'm not going to say which one.)

The lowest fares (in an absolute, mathematical sense) are still there, just buried 40 pages deep into the search results. 99.999999% of all users won't bother to navigate past the first page, but the "complete results" are technically available for you to browse through.

This is just one real-life example -- there are endless, and I mean endless, types of games you can play by sorting of results. As long as the company has something to gain by skewing search results a certain way, some of the companies will choose to do so. (Yet another argument against any one private entity monopolizing access to a certain type of information.)

Aloha,

-Cal

Re:What about other types of "search"?

[rcs1000]

Funny you should mention that.

I always thought that my search results with a certain on-line *travel* agent moved with *ocity* efficiency and would always give me the best price in its database.

Yet, when I restricted the search to my 'favourite airlines', I got different (ie better) results.

I thought it was a glitch. But you've made me think again...

Re:Google

[JamesOfTheDesert]

Gee, I wonder why Google discloses this information without the State stepping in and twisting its arm? Hm. And I wonder why people like Google so much. Hm.

Maybe this is a non-problem. People will go towards the site that gives them the most reliable results. It's easy enough to learn which search engines are upfront about paid links, and which aren't. Caveat emptor, the better sites will win out. Having the State mandate behavior just encourages users to stop taking responsibility for their own behavior. People start assuming everything is safe and on the level, because hey, the State must be controlling it.

Teoma

[brunes69]

Teoma also makes their sponsored links quite prominant. I use Google mainly, but once in awhile I try Teoma too, and am quite impressed. Teoma's "Refine" feature is really REALLY cool, and works well.