Trademarks, Triggers, and Online Search

Abstract

Internet search engines display advertisements along with search results, providing them with a major source of revenue. The display of ads is triggered by the use of keywords, which are found in the searches performed by search engine users. The fact that advertisers can buy a keyword that contains a trademark they do not own has caused controversy worldwide. To explore the actual effects of trademark and keyword advertising policies, we exploit a natural experiment in Europe. Following a decision by the Court of Justice of the European Union, Google relaxed its AdWords policy in continental Europe in September 2010. After the policy change, Google allowed advertisers to select a third party's trademark as a keyword to trigger the display of ads, with only a limited complaint procedure for trademark owners. We use click-stream data from European Internet users to explore the effect this policy change had on browsing behavior. Based on a data set of 5.38 million website visits before and after the policy change, we find little average change. However, we present evidence that this lack of average effect stems from an aggregation of two opposing effects. While navigational searches are less likely to lead to the trademark owner's website, non-navigational searches are more likely to lead to the trademark owner's website after the policy change. The effect of changing keyword advertising policies varies with the purpose of the consumers using the trademark, and it is more pronounced for lesser-known trademarks. The article points to tradeoffs trademark policy is facing beyond consumer confusion. More generally, the article proposes a novel way of analyzing the effect of different allocations of property rights in intellectual property law.

Soft Governance Across Digital Platforms Using Transparency

“…1-20, © 2024 The Author(s) research is in the tradition of work in economics on monopolistic practices (Kovacic and Shapiro 2000). There are also legal regimes for verification, such as trademarks or other intellectual property, that offer participants in digital environments the opportunity to verify transaction partners (Bechtold and Tucker 2014).…”

Brands and corporate power

“…154 Thus, third parties can arrange with internet service providers ("ISP") for the use of certain words and word combinations in on-line searches to trigger advertisements or sponsored links for products that the third parties are selling, supplying or marketing. 155 Again, it is potential consumers who initiate the use of the relevant signs, but here third parties have prearranged automated responses with the intention that consumers should notice and investigate them. 156 In this way, trade marks or similar signs form part of the overall communication that may occur between a third party and an on-line consumer with the third party's prearranged response involving an implicit representation to the consumer in which the sign features.…”

On Quantifying Knowledge Segregation in Society

“…Consumer panels, often equipped with custom browser extensions, have previously been employed for algorithmic auditing, particularly to observe search results and product features (Farronato, Fradkin, and MacKay, 2023). Observing actual consumer behavior through click-stream data could be another avenue to explore consumer preferences (Bechtold and Tucker, 2014). While a detailed exploration of these tools is beyond this article's scope, they could enable precise comparisons between choice architectures and consumer preferences on digital platforms.…”