As antitrust probes are heating up against Google, business owners are speaking out against the tech giant's ad practices that forces them to bid on their trademarked name (GOOG, GOOGL)

Tariq Farid

As antitrust probes are heating up against Google, business owners are speaking up against one of its controversial ad practices, known in the industry as "conquesting."
The practice allows businesses to bid on a competitor's name, even if that name has been trademarked.
The only way to remain at the top of search results, companies like Edible Arrangements told Business Insider recently, is to pay millions of dollars to outbid competitors.
"I hope people realize what [Google is] doing is killing main street businesses," Edible Arrangements found and CEO Tariq Farid told Business Insider in a recent interview.
Last week, Jason Fried, Basecamp founder and CEO, aired his frustrations on Twitter, calling the practice "a shakedown" and "ransom."
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Edible Arrangements — the fruit-on-a-stick, gift baskets— are often sent for joyous occasions: birthdays, graduations, and work promotions, to name a few. Tariq Farid, the company's founder and CEO, however, hasn't personally been over-flowing with fuzzy feelings lately.

As Farid told Business Insider in a recent interview, that's mostly because of a Google ad practice that he says is "killing" business for his 1,100 franchise owners across the country. In response, Edible Arrangements has filed multiple lawsuits against Google for its ad practice, at a time when government regulators are investigating the tech giant over antitrust concerns, especially as it relates to its advertising business.

The issue, Farid said, starts when someone types his company's name — "Edible Arrangements" — into Google. Even though the company's website is the first organic search result Google surfaces, it is not listed at the very top of the page. Those top spots are reserved for advertisements and are awarded to the businesses that pay the most money for the keyword search term, "Edible Arrangements."

That means, to remain atop of Google's search results, Farid and his team have to bid on their own, trademarked brand name to beat out competitors.

"Google is manipulating this for their own benefit," Farid said. "I'm okay for that when it comes to generic terms like 'fruit' or 'basket.' But not for 'Edible Arrangements,' which is our mark. Google has come out and started making millions of dollars off of our name."

The ad practice, known within the industry as "conquesting," is not uncommon or completely unique to the way Google does business. For instance, when searching on Amazon for a particular product, similar products from competitors will likely show up alongside it. That product placement is often not free. Also, when searching in Apple's app store, ads for competitor apps will often be the top results.

Still, Google's involvement in "conquesting" has raised questions as of late, especially with federal and state agencies now formally investigating the search giant over potential antitrust violations. This Monday, fifty state attorneys general announced a joint probe specifically looking into whether Google's advertising businesses have ventured into potentially monopolistic practices.

Forcing businesses to spend big money just to stay atop search results for its own name could potentially raise red flags for regulators.

Edible Arrangements

In response to the ad practice, Edible Arrangements filed a $200 million lawsuit against Google for trademark infringement in early 2018. That case has been moved to arbitration and is still pending.

In a more recent case — filed December 2018 in the state of Georgia, where the Edible Arrangements is headquartered — the gifting company is suing Google for theft.

"This is a simple case," the lawsuit reads. "Google cannot take someone else's property — in this case, Edible IP's property — and sell it on the internet."

The Georgia suit was last heard before a judge on August 9th, when Edible Arrangements argued against Google's motion to dismiss the case. A preliminary decision is still pending.

A Google spokesperson declined Business Insider's request for comment on the case.

The spokesperson did confirm its ad practice of allowing businesses to bid on other, trademarked brand names, but said it prohibits a competitor's name from being used in the actual text of the ad if it is deemed malicious.

"For trademarked terms like the name of a business, our policy balances the interest of both users and advertisers. Like other platforms, we allow competitors to bid on trademarked terms because it offers users more choice when they are searching," the Google spokesperson said. "However, if a trademark owner files a complaint, we will block competitors from using their business name in the actual ad text."

Farid said that Edible Arrangement franchise owners — who collectively share the cost of marketing expenses — spent over $3 million in 2018 to bid on its own company name. That spend, however, was not sustainable, he said, and the company has since cut down on its bids.

Today, when searching for "Edible Arrangements" on Google, ads for its competitors, like 1-800 Flowers and Shari's Berries, often appear at the top of results.

If Edible Arrangements is successful in either one of its suits against Google, limits could be set on the tech giant's current grip over businesses vying for top placement.

"I hope people realize what [Google is] doing is killing main street businesses," Farid said. "When someone can't afford to do advertising because they have to advertise just to protect and police their own name, it's affecting small businesses."

"The whole thing just feels rotten and an example of Google abusing its power."

Another company, which is not taking Google to court but still up-in-arms over the issue, is Basecamp, a project-management tool.

Last week, Jason Fried, Basecamp founder and CEO, tweeted his frustrations with the practice, calling it "a shakedown" and "ransom." Fried's tweet was also accompanied by the ad his company was running in protest of the Google practice, which read, in part: "We don't want to run this ad. We're the #1 result, but this site lets companies advertise against us using our brand. So here we are."

When Google puts 4 paid ads ahead of the first organic result for your own brand name, you’re forced to pay up if you want to be found. It’s a shakedown. It’s ransom. But at least we can have fun with it. Search for Basecamp and you may see this attached ad. pic.twitter.com/c0oYaBuahL
— Jason Fried (@jasonfried) September 3, 2019

Fried told Business Insider in an interview this week that much of his frustration with the practice is how it appears counterintuitive to Google's stated mission of providing relevant search results to users.

"I don't understand how you can be number one on an organic result for your brand name but actually show up fifth because you have four ads ahead of you that [Google is] happy to sell," Fried said. "Those ads are nowhere near as relevant as your brand, which people are clearly looking for. The whole thing just feels rotten and an example of Google abusing its power."

Jason Fried Basecamp founder CEO

Basecamp's chief exec also raised questions as to why Google ads, which were once clearly defined by a yellow-colored background, have increasingly grown to look more like organic results. This can lead to customer confusion, Fried said. It can also lead to someone buying a competitor's product over the product they originally searched for.

"Over the years, ads have become less and less obvious," Fried said. "The whole thing is obscuring the truth, which is like, what are people paying for and what should people be getting in terms of relevancy and intent."

As for whether government regulators will bring relief to these concerns, Fried at least remains hopeful, saying it seems like federal oversight may be one of the only ways changes will be made.

"I don't think Google is going to volunteer to make changes," Fried said. "They're going to do what they're to do to extract as much money from people as they can. That's the story. That's how all these companies behave."

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