HBS Professor Sues Google

Class action suit alleges search company profits from "typosquatting" sites

For a company with the motto of “don’t be evil,” Google has come under increasing fire from critics in recent years for actions that some consider less than well-intentioned.

One of these is now drawing scrutiny from Harvard Business School professor Benjamin G. Edelman, who has filed a class action lawsuit against Google for its decision to contract with “typosquatting” Web sites to place advertisements on these sites.

A typosquatting Web site has an address almost identical to that of another Web site, and is designed to capitalize on internet users’ typos by exposing them to advertisements, according to Edelman, whose research focuses on electronic marketplaces and online advertising fraud.

Typosquatting Web sites usually display ads related to the topic of the intended Web site. If the user clicks on one of the ad links—which often include the Web site the user was originally trying to reach—then the typosquatter will receive revenue.

Typosquatters usually target Web sites aimed at children, such as cartoonnetwork.com, or the Web sites of companies with names that are easily misspelled. But highly-trafficked sites, such as that of Bank of America, are also often targeted.

Every time someone clicks on a Google-supplied ad on a typosquatting site, the advertiser pays Google, which keeps a portion of the money and passes along the rest of it to the company or individual hosting the typosquatting site.

In effect, Edelman is accusing Google and typosquatting companies of profiting from the misuse of other companies’ trademarks.

According to Edelman, industry sources suggest that Google pays its partners 50 to 80 percent of the revenue it receives from advertisers.

“It’s hard to know the specific amount of revenue Google earns from typosquatting sites,” Edelman said. “But it’s not hard to identify a large number of typosquatting sites—as many as a million or more.”

Just as a thought experiment, Edelman estimated that if each typosquatting site earns $25 from Google each year, Google would might charge advertisers between $32 and $50 per year to place ads on just one of these sites.
“With a million domains, that would be 32 to 50 million dollars of gross revenue for Google,” Edelman said.

But Edelman said that he thinks that these estimates are too conservative, and suggested that there are likely more than one million typosquatting domains and that the $25-per-year estimate for typosquatters’ revenue is too low.

The class action lawsuit represents any American trademark holder whose Web sites have been targeted by typosquatters. The lawsuit names Google and several large typosquatting companies as defendants.

“We believe class action adjudication is the most efficient way to resolve these companies’ complaints,” Edelman said. “It would be unreasonably complicated, costly, and time-consuming for all trademark holders to sue separately.”

—Staff writer Prateek Kumar can be reached at kumar@fas.harvard.edu.