SEMPO: FTC Is “Strongly Considering” Review Of How Search Engines Disclose Paid Listings
According to SEMPO, a search marketing industry association, the US Federal Trade Commission is “strongly considering” a review of how well — or poorly — search engines are compliance with its 2002 guidelines on disclosing paid listings to consumers.
The news comes in a letter that SEMPO — the Search Engine Marketing Professional Organization — sent to the FTC today offering its assistance in drafting new guidelines or examining the current state. From the opening of the letter:
We understand that the FTC’s Consumer Protection Bureau is now looking closely at the issue of search labeling transparency and is strongly considering a formal review of compliance with the 2002 guidelines for search engine disclosure concerning paid advertisement appearances in search results, as well as a possible revision of the guidelines.
The letter doesn’t offer any source for the news that the FTC is considering such a review. When I asked where the information about this was coming from, I was told by SEMPO community administrator Clare Madden that it came out of a SEMPO board meeting, though which board member shared the news wasn’t said. Her statement:
We learned through our board meeting. Not sure where our board members first learned about it, but we thought it was important to weigh in on.
FTC: No Comment; Second Source: It’s Likely
The FTC tells me it received the SEMPO letter but had no further comment. “We haven’t announced any plans for a formal review,” said FTC spokesperson Elizabeth Lordan.
Still, it seems that a review is likely to happen. A second source, someone I know who is knowledgeable about the space and Washington DC maneuverings, tells me the same as SEMPO, that the FTC’s Consumer Protection Bureau is indeed looking at doing a review of the FTC’s guidelines.
My Call For An FTC Review
If the review is happening, it was probably prompted by my letter to the FTC earlier this year. In June, I called upon the agency to conduct a compliance review to see if its guidelines about paid listing disclosure were actually being met, since as best I could tell, several search engines seemed to have forgotten them or were happy to ignore them.
After about two months, the FTC finally responded to say it had received my letter but had no further comment about it.
The Full SEMPO Letter
Below, the SEMPO letter in full (it’s not posted on the SEMPO site, so I’m reprinting it here):
October 15, 2012
Jon Leibowitz, Chairman, Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Dear Chairman Leibowitz:
We understand that the FTC’s Consumer Protection Bureau is now looking closely at the issue of search labeling transparency and is strongly considering a formal review of compliance with the 2002 guidelines for search engine disclosure concerning paid advertisement appearances in search results, as well as a possible revision of the guidelines. SEMPO believes that this review and revision would be positive steps to take, and not merely in light of recent media coverage of this subject.
Should the FTC undertake such a review, in addition to signifying the understanding that recent extreme antitrust claims against Google search practices lack merit, it would also be taken to mean that the FTC perceives the benefits of taking a broader, industry-wide approach to search labeling and transparency – a positive position.
As we have publicly stated previously, the search function is not a government-run utility, established by law and thus subject to bureaucratic oversight, but a service provided to consumers and businesses by private companies, which have set up their operations using their own principles, proprietary technologies and algorithms. We feel strongly, for a host of reasons, that regulating individual companies’ search algorithms is undesirable.
Nonetheless, we believe that a level playing field should be ensured for search as a whole – both for the protection of consumers and in furtherance of fair competition within the search industry. Consumers and search engines are both better off when consumers have full transparency about why they are seeing which results on search websites. If the present FTC guidelines on paid placements are being widely flouted, or if certain industry segments – such as vertical search sites – harbor particular practices that mislead consumers, result in fraud, or offer unfair competitive advantage to their commercial customers, the public and the business community deserve to know. And they also deserve to have steps taken to protect them in future.
The 2002 search engine disclosure guidelines were helpful, but the world has changed since then. Updated guidelines would eliminate the need for more prescriptive regulation of search website results, which we believe could be harmful. The fact that not all sites, particularly vertical/specialized search sites, follow current guidelines indicates that it’s time for a fresh look at the guidelines, perhaps starting with a workshop or industry-wide conversation about the issues.
Here is where we believe we can offer assistance. SEMPO stands in a unique position. Our membership includes the leaders and experts in the Search Engine/Search Marketing industry, with all the knowledge that they possess, yet as a non-profit association we function collectively as an unbiased third party, working from the principles of fairness and equity. Our leadership team and membership community are already assisting the U.S. government: for example, we are currently working with the Department of Labor on the classification of job roles. We also compiled and submitted thoughtful and informative communications to the Senate and the House of Representatives concerning the proposed SOPA/PIPA legislation, and we mobilized others to do the same.
Therefore, we respectfully suggest that we could provide valuable insight and background to the Consumer Protection Bureau, both on the topic of a search engine guideline compliance review, and in presenting considerations for the transparency policy development process that might result after such a review.
SEMPO would be eager to contribute to any conversations or workshops on these topics. If tapping our expertise would be useful to you, please contact Chris Boggs [email and phone omitted] to discuss further how we might help.
Mike Grehan, President / Chris Boggs, Chairman / Rob Garner, Vice President / Mike Corak, Treasurer
David Vladeck, Director, Bureau of Consumer Protection
Laura Sullivan, Advertising Practices
Deborah Matties, Attorney Advisor to Chairman Jon Leibowitz
Chris Renner, Attorney Advisor to Chairman Jon Leibowitz
Chuck Harwood, Deputy Director, Bureau of Consumer Protection
As the letter notes, SEMPO has worked with the US Labor Department to classify search marketing job titles and last year, SEMPO sent the FTC a letter asking it either to not regulate or keep regulation of search engines to a minimum, prompted by the on-going Google anti-trust review.
Stay tuned, because it seems likely that the FTC will take some type of action. If you’re trying to understand more about the FTC’s disclosure guidelines, I highly recommend reading my past articles below:
- A Letter To The FTC Regarding Search Engine Disclosure Compliance
- Given Nextag’s Lack Of Transparency, Its WSJ Opinion Piece Asking For Google Transparency Isn’t Wise
- On Google Earnings Call, Google Ignores FTC Definition Of “Paid Inclusion”
(Some images used under license from Shutterstock.com.)
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