KEY POINTS:
Now this will be an interesting case to watch. The Australian Competition and Consumer Commission is taking Google to court along with Australian online retailer Trading Post, accusing the pair of "deceptive and misleading conduct" under the Trade Practices Act.
There's more detail of the allegation
here and the ACCC claims its the first law suit of its kind in the world.
What the case seems to boil down to is an alleged case of passing off where a company attracts business by giving the appearance that it is associated with another company.
There have been some high profile cases of this type in the real world, though generally these types of cases centre on trademark infringement. In the recently settled Trelise Cooper vs Tamsin Cooper case, the former argued that Tamsin Cooper was infringing her trademark by trading under the Cooper name in the fashion industry.
That one ended amicably, with Tamsin Cooper allowed to trade freely. What's potentially more serious is when a company claims to have an association with another company in the hope of attracting business, but has no connection whatsoever.
In the Google case, it's alleged that sponsored links to the Trading Group on the Google website appearing in 2005, contained the terms "Kloster Ford" and "Charlestown Toyota", car dealerships that compete with the Trading Group's online operation.
The equivalent here might be, in theory, sponsored links to Trademe containing references to various car dealerships that don't advertise cars on Trademe.
The ACCC is opening a can of worms here and the internet industry is worried.
A press release that landed in my inbox last night as news of the law suit broke in Australia, quoted Peter Coroneos, Chief Executive of the Internet Industry Association: "The internet industry has always had a positive relationship with the ACCC.
"It's very unfortunate that the ACCC has decided to pursue a litigious strategy against one participant, rather than consulting more broadly on an issue that affects the entire industry," he said.
How many times have you seen a sponsored link advertising a cheap iPod, only to be taken to the cluttered site of an online retailer who sells everything but that cheap iPod?
Big names brands are flashed out from sponsored links all the time, probably without the backing of those big name brands - it's usually smaller companies looking to catch the web user's eye with a cheap price and a known brand name.
That may be a legitimate advertising technique in many cases - what's the point of buying sponsored links on Google if you can't flog your wares, which may happen to be an iPod?
But how is this policed? How can Google prevent advertisers from displaying items or claiming associations with companies it has nothing to do with?
Is Google really at fault here, as the company that facilitates the advertising, rather than originating it?
Could Yahoo be facing exactly the same set of problems as it launches its Panama platform which allows targeted advertising in 19 regions of New Zealand?
All of these questions will hopefully be answered next month when the case goes to court. Internet companies, advertisers and lawyers worldwide will be watching the outcome with great interest.
