"It's definitely not uncommon in the industry to do this," says AltaVista spokesperson Andrew Wong.
The July 16 complaint contends that eight search engine companies--MSN, AltaVista, HotBot, Netscape, Direct Hit, iWon, LookSmart, and Lycos--are accepting money from consumer companies to list products prominently in the search results. It's becoming commonplace that when, say, a student types in a search for "Martin Luther King Jr.," the first result might be an MLK book pitch from Amazon.com, rather than an academic source on the civil rights leader. Called pay-for-placement, Amazon and other companies pay search engines like MSN to list their products first in the search results. There is nothing illegal about this yet, but Nader's Commercial Alert alleges that the practice amounts to deceptive advertising. The problem is that search engines aren't clearly notifying unsuspecting users that their results were paid for.
Many of the search engines attempt to differentiate the pay-for-placement listings from the regular web results, but the Nader complaint says average computer users have trouble telling the difference. The pay-for-placement results are usually listed under two innocuous headings, "Featured Sites" and "Partner Listings," with no mention that the results were paid for. For example, at AltaVista, type in a search for "credit cards" and links to Visa, American Express, and MasterCard come up first. It isn't until 42 results later (and four screens) that the first non-commercial hit--a Better Business Bureau site--comes up. It's not much better over at MSN. Type in a search for a less commercial subject like "Martin Luther King Jr.," and the first two results are a holiday greeting-card company called American Greetings and Encarta, a Microsoft-owned encyclopedia company. Microsoft acknowledges the practice, but insists it offers a healthy mix of commercial and non-commercial listings. "If we didn't, customers wouldn't come back," says Microsoft spokesperson Matt Pilla.
As pay-for-placement becomes more of a reality, search engine companies are becoming reliant on the practice for revenue. According to an August 6 Business Week article, pay-for-placement generates up to 50 percent of search-engine revenues.