July 17th, 2001
Consumer Group Says Search Engines Use Deceptive Advertising
Associated Press
Attacking an increasingly popular Internet business practice, a consumer watchdog
group filed a Federal Trade Commission complaint saying that many online search
engines are concealing the impact special fees have on Internet searches.
Commercial Alert, a three-year-old group founded by consumer activist Ralph
Nader, asked the commission to investigate whether eight of the Web’s largest
search engines are violating federal laws against deceptive advertising. The
group said the search engines are abandoning objective formulas to determine
the order of the results they list and selling the top spots to the highest
bidders—without making adequate disclosures to Internet users.
Search requests are the second-most-popular online activity after e-mail. The
complaint takes aim at new business plans embraced by search engines as they
try to cash in on their role as Web guides and reverse a steady stream of losses.
To boost revenue, search engines have been accepting payments from businesses
interested in receiving a higher ranking in certain categories.
The eight search engines named in Commercial Alert’s complaint are MSN, owned
by Microsoft Corp., Redmond, Wash.; Netscape, owned by AOL Time Warner Inc.,
New York; Directhit, owned by Ask Jeeves Inc., Berkeley, Calif.; HotBot and
Lycos, both owned owned by Terra Lycos, Barcelona, Spain, and Waltham, Mass.;
Altavista, owned by CMGI Inc., Andover, Mass.; LookSmart, owned by LookSmart
Ltd., San Francisco; and closely held iWon, Irvington, N.Y.
Two search engines responded to inquiries about the complaint. Both search
engines, LookSmart and AltaVista, denied the allegations. The Federal Trade
Commission didn’t comment about the complaint.