Australia's consumer watchdog said Thursday it had launched a world-first court action accusing Internet giant Google of misleading web users by misidentifying sponsored links on its search engine.
The Australian Competition and Consumer Commission (ACCC) said it wanted Google to stop publishing search results that fail to distinguish between paid advertisements and "organic" search results.
The ACCC said the case arose in 2005 when Google's search engine listed two car dealerships from the New South Wales city of Newcastle as sponsored links, which are paid for by companies to attract Internet users.
However, the links fed through to the website of a rival to the dealerships, the classifieds magazine "Trading Post", which competes with them for automotive sales.
"The ACCC is alleging that Google, by failing to adequately distinguish sponsored links from 'organic' search results, has engaged in and continues to engage in misleading and deceptive conduct," the regulator said in a statement.
It said it was seeking declarations from the Federal Court that Google and Trading Post had breached trade practices legislation, as well as injunctions preventing Google from publishing results that did not distinguish adverts.
The ACCC named Google Inc, Google Ireland Limited and Google Australia Pty Ltd as defendents in the action, along with the Trading Post magazine.
It said it believed the legal action had no global precedent.
"Although the US anti-trust authority, the Federal Trade Commission, has examined similar issues, the ACCC understands that it is the first regulatory body to seek legal clarification of Google's conduct from a trade practices perspective.
Google Australia said it would fight the action.
"Google Australia believes that these claims are without merit and we will defend against them vigorously," spokesman Rob Shilkin said.
"They represent an attack on all search engines and the Australian businesses, large and small, who use them to connect with customers throughout the world."
The chief executive of Australia' Internet Industry Association, Peter Coroneos, said the regulator shoud have consulted the industry before taking Google to court.
"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.
The case is listed for a directions hearing in the Federal Court on August 21.
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