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Google Might Penalize IAC For Misleading Marketing Practices

Google is weighing on decisions to impose penalties on IAC over misleading marketing practices.

Google  (GOOGL) - Get Alphabet Inc. Class A Report is considering imposing penalties on InterActive Corp.  (IAC) - Get IAC/InteractiveCorp. Report, a leading online media and internet conglomerate, over deceptive marketing practices, according to media reports.

The search giant concluded that IAC misled users about its browser extensions, according to documents reviewed by The Wall Street Journal.

Google performed a broad audit of IAC’s business practices on Google platforms to find that many users of IAC extensions expressed agitation.

Members of the Chrome safety team said that the IAC business model relies almost exclusively on unintentional installs. One user said in a review on Google Chrome store that they were “tricked into installing it and can’t delete it,” according to The Journal.

The IAC-made browser extensions allow users quick access to content such as daily Bible quotations, power-tool manuals, and government forms. Google found that those extensions however promise functions they don’t deliver, leading users towards extra ads.

The Google audit also showed that IAC-led ads ran against search terms that included “how to vote” and “voter fraud.” Users who clicked on those ads didn’t get voter-related content, instead, their browser home pages were reset to MyWay. IAC continued to run such ads despite Google telling the company to stop.

“The behavior was egregious and recommended immediate removal and deactivation of IAC’s browser extensions from the search company’s web store,” documents reviewed by The Journal showed.

Earlier this year, Google removed five IAC browser extensions, according to the company’s reports.

"We're reviewing the remaining extensions and our enforcement options, and have not made a decision regarding IAC's status on the store," a Google spokesman, Scott Westover told The Journal.

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Potential penalties that could be imposed on IAC could go as far as Google banning IAC products from its Chrome browser, a move that IAC chairman Barry Diller said: “would devastate a key part of its business.”

IAC owns Angie’s List and over 100 other online products. It also offers a search engine called MyWay that uses results and ads provided by Google.

"Google has taken hundreds of millions of dollars from us to advertise and distribute these products in the Chrome Store," said an IAC spokeswoman, Valerie Combs. "There's nothing new here -- Google has used their position to reduce our browser business to the last small corner of the internet, which they're now seeking to quash."

She added that some of the ads cited by Google’s investigators were “inappropriate” and “misleading” and blamed affiliate marketers.

Google hasn’t acted on the internal recommendation of its Chrome trust and safety team regarding IAC because both are competitors in some categories and because Google’s executives are concerned that penalties could be viewed as anti-competitive, people familiar with the matter told The Journal.

IAC spends hundreds of millions of dollars a year on Google ads, The Journal reported, and its financial statements should that the company received 27% of its total revenue from Google in 2019.

Chrome users installed IAC’s browser extensions over 150 million times, reaching a total of $291 million in IAC revenue in 2019.

Last month, Tech giants Facebook and Google could face as many as four new antitrust lawsuits in January, a media report says.

Federal and state antitrust authorities are preparing to file new lawsuits against Google for abuse of its competitive position in search and advertising practices, people familiar with the matter told the Wall Street Journal. Facebook faces action regarding its social-media dominance, the paper reported.