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.

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.

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...

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.

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.