free html hit counter Updated: Google About to Settle Click Fraud Class Action Suit | John Battelle's Search Blog

Updated: Google About to Settle Click Fraud Class Action Suit

By - March 08, 2006

The company has posted on the topic here. My original posting is here. This is clearly not just about the Lane’s suit, it’s about Google rejiggering its policies with regard to click fraud.

From Google’s post:

We’re very near a resolution in that case, so we thought we’d offer an update.

We’ve been discussing the case with the plaintiffs for some time and have recently come to an agreement with them which we believe is a good outcome for everyone involved. As a result, Google and the plaintiffs are going to ask the judge to approve the settlement, which would resolve the case.

Until the settlement is approved by the judge, it is not final. And the details are confidential, but will become public when it is formally filed for the judge’s consideration. However, we can share the major pieces of our proposed agreement.

Google currently allows advertisers to apply for reimbursement for clicks they believe are invalid. They can do this for clicks that happen during the 60 days prior to notifying Google. Under the agreement with the plaintiffs, we are going to open up that window for all advertisers, regardless of when the questionable clicks occurred. For all eligible invalid clicks, we will offer credits which can be used to purchase new advertising with Google. We do not know how many will apply and receive credits, but under the agreement, the total amount of credits, plus attorneys fees, will not exceed $90 million.

What I am not sure I grok is – is this $90 million set aside only for the plaintiffs in the Lanes’ case, or is that the total Google is setting aside for all advertisers, period? I’ve asked Google for clarification. Seems to me, if they are changing their policy, the claims, and the costs, could go well above $90 million.



UPDATE: I have confirmation that indeed, this $90 million covers all US claims. In other words, this is a very small drop in the potential bucket. All US advertisers that have *ever* spent money with Google have the right to make a claim, but the total amount of those claims is capped at $90 million, a pittance compared to the billions that Google has made from AdWords/sense in the last five or so years.

On the one hand, this validates Google’s claim that clickfraud is not that big a deal. On the other, Google settled, and relatively quickly, and probably with the knowledge that a quick settlement was far better than a drawn out, public trial that might make the company look, well, defensive at the best. At the worst, it could have meant a terrible PR nightmare, and a hell of a lot more damages than $90 million. My first take: This settlement is a major victory for Google. Was it good for advertisers? Not sure. But I think the folks at Google are pleased as punch with the deal.

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18 thoughts on “Updated: Google About to Settle Click Fraud Class Action Suit

  1. What is of concern is the lack of extreme effort Google has shown in addressing Click Fraud.

    Having access to the best brains globally – and – top hi-tech – it is certainly do-able.

    Will Yahoo MSN and ASK be more likely to respond to concerns from THEIR users.

  2. Search Engines Web,

    Someone recently said to me:
    “Fighting click fraud is a problem everyone wants to tackle until they can.”

    Think about that one for a while…

    Best,
    David

  3. Settlement is for the class in the case, the class being all Google advertisers in the US. They’ll get to divvy up the $90 million among themselves and if that’s not enough, that’s not enough. But since both parties agreed to this, it sort of confirms the Google position that it’s not billions we’re talking about.

  4. Danny,

    Did you get confirmation from Google that the $90 million is only for this case?

    Google’s post seems to indicate otherwise:
    “Under the agreement with the plaintiffs, we are going to open up that window for all advertisers [...]. “We do not know how many will apply [...] but under the agreement, the total amount of credits [...] will not exceed $90 million”.

  5. David says:

    I have a JD and after reading about this settlement I think it is pretty bogus (except for the lawyers and for Google, of course). I just wrote a quick blog post on it here: http://blogation.blogspot.com/2006/03/google-click-fraud-settlement-lives-up.html. Would love to hear people’s comments.

  6. The $90 million IS for only this case, but this case is a *class action* lawsuit. That class is all Google advertisers in the US. That’s why they are saying ALL advertisers in their statement.

    Actually, all is not quite correct. I covered in my post on the story that advertisers outside the US may not be covered. Google won’t comment on this — I did try, but everyone’s largely quiet because the settlement is still pending. That’ll be an issue, ’cause they’ve got plenty of non-US advertisers who may feel they are entitled to the settlement

  7. Gardner says:

    I have recently had this subtle, almost subconscious feeling when I google things: Google is Alta Vista. Google doesn’t working anymore. It’s old technology and someone needs to re-invent “search” once again.

    Don’t look at me for an answer, ask Battelle (http://battellemedia.com/), I guess. I’m just a critic, but I find myself having to be more and more clever to find what I search for. (Aside: I too hate that prepositions are now accepted behind a sentence, but it’s true, you sound like an idiot if you say, “find for what I search”)

    Anyway, I am VERY bad at choosing successful technology* but I know what doesn’t work and Google is failing. They are making excuses for their China policies, paying millions for click-fraud, and did I mention it doesn’t work. Here is my tipping point: I was watching “Mary Poppins” for the 32 time and decided to “google” “view haloo.” I figured I would get a hit telling me about fox hunting traditions, etc. But the second link was a 404 and the first two pages of links were useless. That was it, I was tipped or pointed or something. So who has a better search engine for me now? I want to be dazzled again. And who knows what “view aloo” means?

    —-

    * One example: I had dinner with a founder of eBay a few months before they went public and said, “Online auctions? Are people really going to want that?” **

    ** After hearing that they were already profitable I did ask–to my wife eternal embarrassment –if I could get in on the IPO. ***

    *** No, I didn’t.

  8. JJR says:

    I agree with Danny that this shows it’s not the billions people often mention. $90M is a pretty small part (less than 1%) of their revenue over the time period covered.

  9. Joe Hunkins says:

    >> it sort of confirms the Google position that it’s not billions

    No it doesn’t! It shows how hard it is to prove click fraud in this case.

    Also, in Google’s notes on the case, it confirms what a smooth talker they’ve become. They link to a fairly good study indicating high fraud but suggest it’s seriously flawed. More likely – fraud is high as indicated BECAUSE it’s hard to prove and lucrative.

  10. I think the continuous competition among the giants, with Barry Diller now getting Ask.com going and Mircrosoft unveiling their new, improved search entry, I think that competition and the market will deal with this problem better than anything else.

  11. gregbo says:

    Due to the anonymous nature of the web with regards to search and CPC advertising, there will never be “proof” of click fraud. Individuals may be caught, but no one will ever be able to look at any click stream and prove that it contains fraudulent clicks. There may come a day when ad publishers and SEs agree on what constitutes click fraud, but we’re not there yet.

    As always, my general thoughts: CPC is a bad business model because of its serious vulnerability to click fraud, and I wonder why Google (and others) did not respond to the threat earlier.

  12. bryanb says:

    Gregbo is right. The amount of the settlement has zero to do with the size of the problem. I bet there are people sitting on the adwords/adsense teams at Google that think “if anybody ever finds out how huge click fraud is, we’re done”. I don’t know how you prove that overseas click farms are fraudulent if you’re an advertiser and have no access to all clicks over time across all ads.

  13. JJR says:

    The size of the settlement has a whole lot to do with how big the problem is. Click fraud is definitely rampant, but the bills you get from Google are, on average, about 25% less than the number of clicks you get. So there’s a lot of fraud, but the amount that’s getting billed through is a small piece of that.

    If the sky is really falling, it shouldn’t be so hard to prove that the settlement is less than 1% of their revenue in that time.

  14. Joe Hunkins says:

    JJR I think you are either a lucky guy or miscounting. I think it’s very rare to see Google credit 25% for bad clicks – normal is perhaps a 1 or 2 percent credit.

  15. John, I have an advertising background which convinces me that if “make goods” become a legal precedent for search engines, it will have two implications that I put in my my blog post of 3/10/05.

    Both implications are great for the search engine, and not as great for the advertiser due to PPC inflationary trends.

  16. Capping the US click fraud numbers at $90 million backdated to 2002 is a brilliant move on the part of Google. It is an attempt to kill the threat of click fraud to company growth by covering all back liability. The case will be reopened when a company seeks redress and is given a pittance of what is legitimately due him.

    This one is a good example of the search industry spin doctors at work. Nothing heavy-handed here – no bold statements of what the ruling fully entails… let it get some distance and have a chance to solidify.

    Nice try Google but this one gets reopened and that $90 million will be a small part of solving this problem.

  17. Google may claim that they manage the problem of invalid clicks “very well”. But what does that mean? I am sure they do have a large team of expert engineers and analysts devoted to it, but I don’t believe automatic filters are the answer. I believe Google are playing this down because they know it’s a problem they can never really solve. They can reimburse people if the advertisers know or can prove there is a problem. But I would guess they are in the minority. I am convinced this is the tip of the iceberg.

  18. News Report says:

    The Person responsible for accusing lots of other companies of click fraud is Clarence Briggs of AITCOM.NET

    But be Aware of known questionable activities of AIT.COM itself and its CEO Clarence Briggs:

    NEWS REPORT:

    “AIT.COM CEO Clarence Briggs Charged with Criminal Assault”

    “Business executive and soldier get in fight”
    09/18/05 at 6:28pm

    Fayetteville Observer Newspaper
    (http://www.fayettevillenc.com ):

    Business executive, soldier in fight

    By Paul Woolverton Staff writer

    Clarence Briggs, the chief executive of Advanced Internet Technologies, has been charged with knocking an Army soldier to the ground Aug. 26, hitting him in the face and smashing his head into the concrete.

    Briggs, in turn, has charged the soldier, Staff Sgt. Rodney Goudy of Fort Bragg, with throwing him to the ground and threatening to kill him.

    The violence happened outside the B&B Sports Tavern on Person Street in downtown Fayetteville, records say.

    AIT’s chief financial officer, Steve Young, has also filed a charge against Goudy from the incident. Young accuses the soldier of threatening to hurt him.

    AIT is an international Internet Web-hosting company that Briggs started in his home in Fayetteville in 1996. Its headquarters now fills much of a city block in downtown Fayetteville.

    Briggs and Goudy are scheduled to face their charges in Cumberland County District Court on Monday. However, court and Fayetteville police records say that Briggs has not yet been served with the warrant charging him with assaulting Goudy.

    Goudy, Briggs and Young presented varied accounts of what happened at the bar.

    In his charge, Goudy wrote, “Mr. Briggs asked me to go outside to discuss something because the music inside of B&B Sports Bar was loud. When we turned the corner, Mr. Briggs had his arm around me like we were old friends and he stuck his leg out, grabbed me and threw me on the ground, sat on me and proceeded to hit me in the face. He threw my head back into the concrete.”

    Goudy declined a request for an interview. Goudy’s lawyer, David Courie, said that his law firm is “investigating scope, severity and frequencies of their alleged behavior,” but declined to make further comment.

    Young also declined an interview request. Briggs referred questions to AIT spokesman Alex Lekas.

    Staff writer Paul Woolverton can be reached woolvertonp@fayettevillenc.com or at 486-3512.

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    The website named Igeryon.org is self-purported focal point for claims of clickfraud against other companies. This site is revealed to be owned by same Clarence Briggs and web hosting company AIT.COM

    Domain Name:IGERYON.ORG
    Created On:30-Nov-2005 22:28:29 UTC
    Last Updated On:04-Oct-2006 12:41:21 UTC
    Expiration Date:30-Nov-2007 22:28:29 UTC
    Sponsoring Registrar:Advanced Internet Technologies, Inc. (AIT) (R232-LROR)
    Status:CLIENT DELETE PROHIBITED
    Status:CLIENT TRANSFER PROHIBITED
    Status:CLIENT UPDATE PROHIBITED
    Registrant ID:AITorgORG7271
    Registrant Name:Attention . Clarence Briggs
    Registrant Organization:AIT, INC
    Registrant Street1:421 Maiden Lane
    Registrant Street2:
    Registrant Street3:
    Registrant City:Fayetteville
    Registrant State/Province:NC
    Registrant Postal Code:28301
    Registrant Country:US
    Registrant Phone:+1.8775492881

    Same person, Clarence Briggs, was charged with criminal assault on members of the American armed forces, and beating one in face, as reported in the NEWS. Check yourself into the activities of AIT.COM

    Simply type “AIT Reviews” or “AIT.com REVIEWS” or “AIT comments” or “AIT.com hosting company reviews” or your choice into any search and learn about the dealings of the AIT corporation.

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