FTC: Sites must flag paid listings--or
Mon Jul 1, 6:56 PM ET
The Federal Trade Commission on Friday
said search-engine companies need to
clearly mark paid listings on their sites,
concluding an 11-month investigation.
Responding to a complaint last July from
Portland, Ore.-based Commercial Alert, the
FTC said it would send letters outlining
the need for clear disclosure to companies
that offer Internet search services.
Companies named in the complaint were
AltaVista, AOL Time Warner, Direct Hit
Technologies, iWon, LookSmart, Microsoft
and Terra Lycos.
The FTC said it would not take formal
action at this time, however, noting that
many of the sites named in the original
complaint had already taken steps to flag
paid listings. Of the 12 search sites
owned or operated by the seven
search-engine companies named in the
complaint, 11 separate paid-ranking
results by placing them above the non-paid
results, the agency found.
Commercial Alert Executive Director Gary
Ruskin said the FTC's response was a
victory for consumers.
"The FTC is telling search-engine
companies to adopt clear and conspicuous
disclosure for paid listings, under direct
threat of possible future commission
action," he said. "They've set standards
of disclosure and are telling
search-engine companies to comply."
The tussle over paid-search listings comes
as Web publishers turn to search engines
as a rare bright spot in an otherwise
bleak environment for online advertising.
Paid-search company Overture Services has
posted strong revenue growth in recent
quarters on the strength of a syndicated
paid-listings service that has won over a
long list of customers, including Web
The sudden proliferation of paid listings
has raised red flags for consumer groups
such as Commercial Alert, which claims the
practice threatens to undermine editorial
integrity on the Web.
Some search-engine companies downplayed
the FTC's result, saying they had already
taken steps to clearly mark listings that
appear as a result of payments from
advertisers. An AOL Time Warner
representative said the company's Netscape
Communications division at one time had
used the term "Partner Listings" to
display such results, but changed the
language to "Sponsored Links" prior to
this week's decision.
In a statement, Fred Bullock, AltaVista's
chief marketing officer, also defended his
"We believe that the paid listings that we
display on our site are delineated from
our search results and that the disclosure
is not misleading," he said. "To date, the
FTC has not addressed any letter to us
regarding this matter. If and when we do
receive such a letter, we will take it
very seriously and review its
recommendations carefully. We will then
In its letter Friday, the FTC said some
disclosures from search engines still fall
short. The agency singled out a long list
of terms that it considers inadequate,
including "Recommended Sites," "Featured
Listings," "Premier Listings," "Search
Partners," or "Start Here."
"Other sites use much more ambiguous terms
such as 'Products and Services,' 'News,'
'Resources,' 'Featured Listings,' 'Partner
Search Results,' or 'Spotlight,' or no
labels at all," the FTC found.
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