Macworld UK - Google click-fraud settlement = approved

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Macworld Daily News

Friday - July 28, = 2006

Google click-fraud = settlement=20 approved

By Juan Carlos Perez

=20

A judge has given final approval to the = settlement of=20 a click-fraud lawsuit, despite critics' = characterisation=20 of the settlement as a slap on the wrist for = Google.=20

Judge Joe Griffin heard arguments for and = against=20 approving the settlement this week, and signed = off on=20 the final settlement on Wednesday, according to = a copy=20 of the court order.

"We're pleased Judge Griffin has affirmed the = settlement as appropriate and fair to = advertisers. We=20 look forward to continuing to manage invalid = clicks=20 effectively and provide our advertisers with an=20 outstanding return on their investment," said = Nicole=20 Wong, associate general counsel at Google.

The decision isn't surprising, considering = Judge=20 Griffin had given preliminary approval earlier = this year=20 to the settlement of the nationwide class-action = lawsuit=20 filed by lead plaintiff Lane's Gifts and = Collectibles=20 against Google and other internet companies. =

There may be trouble ahead

But Google can expect a challenge to this = settlement.=20 Shawn Khorrami, a Los Angeles-based attorney who = represents advertisers in click-fraud lawsuits, = said he=20 is part of a legal team representing a member of = the=20 class action who objected to the settlement and = who=20 plans to appeal the ruling.

"It's definitely, by far and away, the most = absurd=20 settlement we've ever seen. It's a shame any = judge would=20 put a stamp of approval on it," Khorrami said. =

In the lawsuit, Lane's Gifts alleged being=20 overcharged for online ads due to click fraud, = which=20 occurs when someone clicks on a pay-per-click ad = with=20 malicious intent.

For example, a company official may click on=20 competitors' ads to increase their ad spending, = or a=20 publisher may click on his website's ads to = increase his=20 commissions. Estimates about click-fraud = incidence vary,=20 with some putting it as high as 20 per cent of = all=20 clicks.

The February 2005 lawsuit includes other = internet=20 companies such as Yahoo and AOL, which haven't = settled.=20 Lane's Gifts and the class action, excluding a = number of=20 plaintiffs who objected to the agreement, = settled with=20 Google for $90 million. A third of that amount = will go=20 to pay attorneys' fees and the rest as credits = to=20 affected advertisers who can certify click-fraud = instances. The credits can be applied towards = future ads=20 purchased from Google.

Google whacked

The class action, which Judge Griffin also = certified=20 in his final order, includes buyers of Google = online ads=20 between 1 January 2002 and 26 July 2006. In the=20 settlement, Google denied the plaintiffs' claims = and=20 didn't admit to any wrongdoing or legal = liability.

The judge wrote that 556 potential members of = the=20 class action opted out of the settlement. By = opting out,=20 these advertisers lost their chance to claim = credits as=20 part of the settlement but retained their = ability to=20 pursue click-fraud litigation against Google. = Those who=20 took part, on the other hand, are, according to = the=20 judge's order, "forever barred and permanently = enjoined"=20 from suing Google over click fraud.

In this week's hearing, the judge heard = objections=20 from plaintiffs who complained that the = settlement=20 amount was too small, that too much money will = go to=20 attorneys, and that the agreement puts too much = of a=20 burden on affected advertisers to prove click = fraud.=20

Joseph Kinney is suing Google and Lane's = Gifts in the=20 same Arkansas court to have the now-final = settlement=20 dismantled. In his lawsuit, Kinney asked the = court to=20 declare Lane's Gifts as not adequately = representing the=20 nationwide class of plaintiffs. He also asked = for a=20 temporary and permanent injunction blocking the=20 settlement.

Khorrami, who is part of the legal team = representing=20 Kinney, said the settlement's approval will not = deter=20 Kinney from pursuing his lawsuit.

As part of the settlement, a New York = University=20 computer science expert conducted an independent = examination of Google's click-fraud detection = methods.=20 The expert, Alexander Tuzhilin, concluded that = Google is=20 making a "reasonable" effort to fight click = fraud.

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Analysts= :=20 Zune shows promise, but it's no = iPod

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Microsof= t=20 tries to dazzle EU with Vista's=20 benefits

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