Bada-Bing, Microsoft Bumps up the Fight Against Click Fraud


What does suing two brothers and their mom in Vancouver for $750k have to do with taking on Google?  

More than you’d think.

As reported in the WSJ,  Microsoft recently “filed a lawsuit against three people that it alleges committed a form of “click fraud” (…)  in which automated computer scripts or large groups of people click on (pay-per-click) online advertisements without having any interest in the services or product being advertised. The company alleges that the defendants engaged in “competitor click fraud,” one form of the ruse in which a perpetrator seeks to exhaust a competitor’s (pay per click) advertising budget while boosting the prospects of their own advertisements.”

Click-Fraud-This-And-I-Will-Cut-You-SuckaThe defendants in this case are Eric Lam, his brother Gordon Lam and their mother Melanie Suen, who ran up prices for ads for auto insurance and World of Warcraft Gold.  World of Warcraft (aka WoW) Gold is a virtual currency, that you’ll need if you want to upgrade your Orc’s wimpy little “this-is-your-dad’s-Oldsmobile” battleaxe to a blinged-out Fel Edged Battleaxe.  See, the Lams owned a site called WoWMine.com, and some of their competitors included such notables as wowgold-sale.com, wow-cheapwowgold.com,  wowpowerwow.com and innumerable others. The Lams needed to get a Fel’s edge on the competition, and (allegedly) used click-fraud to peddle more of their virtual metal.  

Woo-hoo Microsoft… making the world safe again, right?

Well, the way I see it, this isn’t just a case of  “Too-Little-But-Not-Too-Late”  in the online scourge that is click fraud.  This is another way that Microsoft tries to establish itself as the “good guys” of online search who “clean things up.”

Click fraud is old news, which makes its continuance all the more appalling.As a former owner of a consumer-facing online retail store, I’ve had more than my share of terse conversations with advertising representatives at Yahoo and Google who were complicit with the abuse of their system by their “publisher” networks and “unique” users. adsense-click-fraud-cultpruit-foundMy peers who owned online businesses were all complaining too, but what real short or medium term incentive did those search engine salespeople have to look into an advertiser’s complaint of click fraud? They had an ever-increasing number of people using their services and had quarterly sales targets (and pay bonuses) directly linked to the volume of clicks on their advertiser accounts, so why bother look into a purported scam that is difficult (but not impossible) to track?    The long term incentive (customer trust, service and brand integrity) wasn’t enough to spur action.

Eventually, we negotiated some simple estimated “store credits” based on unusual click traffic.  This saved Google and Yahoo the hassle of having to investigate the integrity of their networks and gave us a bit of a break, but unfortunately that workaround only dealt with sudden bursts of click fraud.  For ongoing click fraud, particularly from sleazy competitors, it did nothing. In the past few years, I know of at least two lawsuits — against IAC and Google — launched by advertisers who allege that those search engines have not being doing enough to deliver what they promise to their customers — clicks from actual live prospective customers.  Google settled their case for $90 million. I also know of one case where Google went after a click fraudster, but only after he tried to extort them for $100k.  Aside from that, I don’t know of any cases where Google pursued legal action against people simply because they tried to make themselves (and Google) extra money by having advertisements clicked a few (hundred thousand) extra times.

Enter Microsoft and Bing.  Bing is all about making a whole bunch of nit-picky improvements to the search experience, to make it more usable and practical.  Whether or not Microsoft succeeds in getting a serious piece of Google’s pie, they will definitely raise the game in terms of search relevance and user experience. ..and “users” include advertisers, who pay for the experience.This is especially true in the beginning stages of Bing’s existence, where Microsoft has to prove the value of its audience to prospective advertisers.  So, in the spirit of “the best defense is a good offense,”  rather than wait for advertisers to complain that Bing’s system is being gamed, Microsoft has sued some poor enterprising Vancouverites with (allegedly) poor business ethics, who just wanted to make a mint selling some WoW bullion.   

Doctor-GoogleSo, this lawsuit is just a little bit of PR/street-cred for Microsoft.   What about Google?  Will it go beyond its passive “we’ll tweak our click-filtering algorithm” approach, and go after the people involved?

Google has something that Microsoft doesn’t: Dominance in online search. With its massive datastores, computational power, ubiquitous toolbars, regional hubs and whatnot, Google is actually in a position to put a serious dent in click fraud, by exposing the sources of it.  In fact, all Google would have to do is publicly post the stuff that its ‘click-filters’ are capturing. If everyone could see where the clicks were coming from, which ads those clicks were attacking — and even which competitor ads were NOT being attacked — there are enough people with an interest to appropriately monitor, analyze and act on this information. The people running the click fraud scams would see it too, but they can see it anyway, by opening their own Adsense accounts, so this would not give them an additional edge in the technological arm’s race. Google could maintain its ostensible image of being a neutral provider of just-the-facts, free the information for the masses, yada yada.  

How about it, Google? As Spidey’s dad famously said, with great power comes great responsibility. We don’t buy the passive, non-adversarial act. “Don’t be evil” is not a moral vision… it’s more like something an unscrupulous Swiss banker would say, trading in all kinds of anonymous gangster gold.

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About danspira

My blog is at: http://danspira.com. My face in real life appears at a higher resolution, although I do feel pixelated sometimes.

Posted on June 16, 2009, in Advertising, Business, E-Commerce. Bookmark the permalink. 2 Comments.

  1. WoWMine and the Super Continental companies were beneficially owned by David Guo (Guo Yao Qi) 郭耀琦 the whole operation has now stopped trading. Eric Lam was just the front man or proxy. He is a Canadian citizen with a Western MBA so was the only employee of the gold farmers able to set up the credit card accounts necessary for WoWMine to operate in the west. He left the business in April 2009. David Guo’s company in China was called Guangzhou UE Digital Technology Co. Ltd. David Guo realised that the gold farming business existed at the whim of Blizzard, so created his own game with the sale of in-game items built into it. This game is Evony. Just as with the gold farming he set up a USA front company, Evony LLC. To handle the money he set up Super Continental LLC. The director of both is Lu Lu, a friend of David Guo’s and another proxy. The money from the game goes to another Super Continental company, this time in Hong Kong, which is owned by yet another Super Continental company, this time in the Marshall Islands, which is tax free and has near zero corporate disclosure. The business earns over $150,00 per day. It is Google’s fifth biggest advertiser. More here: http://arstechnica.com/gaming/news/2010/03/evony-investigating-the-game-everyone-loves-to-hate.ars
    David Guo is hiding from this whole Microsoft case so has moved to a new Guangzhou company with as misleading a name as possible: Qingdao Dragon Import & Export Co., Ltd,.

  2. Bing drives me crazy!!!!!!!!! Kill it!!!!!! Especially on msn.com. They’re just old stories!!!!!!!!!!! Bill Gates, wake up and smell the roses!!!!!!!

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