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Lastminute prepared to sue Google

By Benjamin Cohen

Updated on 02 May 2008

Channel 4 News learns that Google could face a major legal action over plans to change the way it sell advertising.

Google is one of the world's largest sellers of advertising space. Every time we click on a sponsored link, the company that places it pays Google.

At the moment if we type a trademarked business name, for instance Auto Trader or Tesco, we get a results page which only shows that company's advertisement at the top.

With Google's new system - which already operates in America - a search under those same names will result in a whole list of adverts.


The heat in this dispute is that the big brands believe Google is so dominant they have no choice but to advertise with them.

This is because rival companies are also allowed to advertise on the trademark. It means that if you search for, say, Lastminute.com you could get an advert for another travel company.

The chief executive of Lastminute.com, Ian McCaig, told us that Google's proposals will cost them millions and could breach trademark law.

If Google go ahead with this change the company is prepared to sue, "We believe that Google's policy change is a big problem and we object to it. We are investigating with vigour the legal position and if that investigation concludes positively then we will absolutely pursue a legal case, no question."

Channel 4 News has learned that Lastminute isn't alone in considering legal action.

A number of other companies, including the owners of Auto Trader, told us that they would consider joining with other brands in a group legal challenge to Google.

In a statement, Tesco also said that it is "disappointed at Google's recent changes to their trademark policy as we think that consumers are the people who will be disadvantaged."

Tesco has consulted its legal team, but is adopting a "wait and see approach" before deciding whether to take any action.

Google say it is confident that it is acting within the law and not abusing a market leading position.

Google's UK head, Matt Brittin, completely dismissed Tesco's charge. He told Channel 4 News: "We are absolutely making this change because we believe it improves our service to users.

"If we do things that are right for users then we would expect to make some money out of it, but it is not something we are doing because we believe people will have to pay more for their trademark terms, absolutely not."

The heat in this dispute is that the big brands believe Google is so dominant they have no choice but to advertise with them.

Legal expert Professor Ian Walden, from the University of London, says that the confrontation may ultimately require the regulator to intervene.

He said: "There is a serious confrontation that is going to arise between the companies that invest millions of pounds in their brands and their reputation, feeling that they are going to kow-tow to the power of Google as the search engine."

"Google in the current marketplace has significant market power, so the question is whether rights holders will be able to adequately protect themselves or regulators will have to step in to control the market power of Google."

When it comes to advertising, the internet is now taking over from television and newspapers.

But the advertisers aren't happy - and Google's own brand could be badly damaged by a fight with the very companies who have made it so profitable.

This special report will be broadcast on Channel 4 News on Saturday 3 May 2008.

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