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July 24, 2006

Google Click Fraud Hearing Begins Today

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All eyes are on Arkansas today as Federal Court Judge Joe Griffin begins the two-day hearing to rule on the more than fifty raised objections to the Lane’s Gift settlement. Griffin will take the recently filed independent report assessing Google’s click fraud system and Google’s own response into consideration before deciding whether to finalize or modify the proposed $90 million settlement.

Though Alexander Tuzhilin, the NYU professor responsible for the independent report, deemed Google’s click fraud efforts “reasonable”, he did say that before March 2005 Google allowed some “questionable practices”. It will be interesting to see how much weight Griffin will give to such statements and whether he will take into consideration the “intrinsic problem” Tuzhilin identified between PPC and its advertisers.

“This is a source of contention and dispute between Google and the advertisers. On one hand, the advertiser has the right to know why a particular click was marked as valid by Google (when the advertiser thinks that it is invalid) because the advertiser pays for this click. On the other hand, if Google discloses this information, it opens itself to click fraud on a massive scale because, by doing so, it provides certain hints about how its invalid click detection methods work.”

Most advertisers are unsympathetic to Google’s disclosure dilemma. Fifty-one advertisers have filed formal objections to the settlement, saying it “unfairly shifts to them the burden of proving their losses and that they don’t have the resources to easily pursue their claims”.

Google denies the settlement is unfair and continues to question the merits of the original class action suit. Griffin is expected to hear arguments Monday and Tuesday before deciding whether to finalize or modify the settlement.

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