WASHINGTON, DC – Consumer Watchdog has filed a formal complaint with the Federal Trade Commission about the deceptive and unfair way Google displays results from its comparison shopping engine, Google Shopping, in its search results, the nonprofit public interest group said today.

“The way that the Internet giant is featuring results from Google Shopping without making it clear that the highlighted results are nothing more than advertisements for merchants who bid for placement is an unfair and deceptive act, violating Section 5 of the Federal Trade Commission Act,” wrote John M. Simpson, Consumer Watchdog’s Privacy Project Director, in a letter to the Commission. “Moreover, consumers are actually being harmed because the featured results from Google Shopping more often than not return higher prices than can be found elsewhere, when consumers would reasonably expect Google’s suggestions to be the best.”

Read the letter here: http://www.consumerwatchdog.org/resources/ltrftcgoogle120313.pdf

Google has become most people’s gateway to the Internet, Consumer Watchdog said. Seventy percent of searches are on Google, so it’s more than likely a consumer would start his or her online search for a particular product, say “digital cameras” in Google’s search box.

Google responds with links to relevant websites, articles and clearly labeled ads. It also offers suggestions from its Google Shopping service, with photographs of specific camera models. Most people likely expect these to be Google’s suggestions for best prices, Consumer Watchdog said. However, if a person clicks on a pictured item, it takes them directly to the seller’s website, although there is nothing to indicate it’s an ad and that the

seller pays Google and bids to be featured in Google Shopping.

“Google’s presentation of the Google Shopping results disguises the fact that the results are in fact advertisements. Clicking on any one of the Google Shopping suggestions takes the user directly to the merchant’s page where the product can be purchased,” the letter of complaint said. “Each suggestion is

nothing more than an advertisement, however, there is no label that makes this clear. The omission of an ad label is even more egregious when the Google Shopping results are presented surrounded by results that are marked as ads. Thus, the consumer can only conclude that the Google Shopping results are suggestions, not advertisements.”

A Consumer Watchdog study found that more often than not, the item featured in the Google Shopping result is not the lowest price. The nonpartisan, nonprofit public interest group compared the featured price of 14 items featured in Google Shopping and found that it was more on Google in eight cases than the same item on a competing CSE like Nextag, Shopzilla or Pricegrabber.

Read Consumer Watchdog’s study here: http://www.consumerwatchdog.org/resources/googlereport112513.pdf

The Financial Times also analyzed the situation from another perspective and found five out of every six items highlighted on a Google search are more expensive than the same items from other merchants hidden deeper in the Google Shopping service, with an average premium of 34 percent.

Read the Financial Times analysis here: http://www.ft.com/cms/s/0/8c1f2e90-5501-11e3-86bc-00144feabdc0.html

Consumer Watchdog’s letter of complaint concluded:

“Google originally offered Google Product Search, which did not charge for placement. Consumers relied upon it to use appropriate algorithms to offer the best suggestions in response to their

product queries.

Then Google used a classic bait and switch, getting consumers confortable with its comparison shopping engine. It then changed the name to Google Shopping, but more importantly changed its business model to charge merchants to be featured.

“Google Shopping results featured in Google Search are nothing more than ads that are highlighted based on what merchants bid to be there. Google deliberately disguises this fact in the way it presents Google Shopping results. This is clearly an unfair and deceptive practice and we call on the Commission to use its Section 5 authority to end this abuse.”

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