Google is set to allow advertisers in Europe to use rivals' trademarks when bidding for online ads in a move that will prevent big brand owners from controlling which ads appear during users' searches.
The change, announced at a news conference in Paris on Wednesday, will take effect on September 14 in most European nations. It brings Europe into line with how Google works in the United States, Britain and about 200 other countries.
Google made the change in response to a European Court of Justice decision in March that ruled that it did not infringe trademark law by selling keywords to trigger ads.
Luxury goods group Louis Vuitton and others had said the practice undermined their brands.
The court said brand owners could appeal to Google on a case-by-case basis to change ad results if they felt the results confused users.
The ruling validated the AdWords paid-search business at the core of Google's $23 billion advertising operations as well as the way competitors like Yahoo! Inc sell ads, while also giving brand owners a way to protect their trademarks.
Under Google's existing system for AdWords in Europe, brand owners could petition Google to remove ads that appeared next to and as part of the search results on their trademark.
For example, Renault could ask Google to remove ads for car re-sellers or rival Peugeot that appear when an Internet surfer searches for Renault.
Under the new system, Google will only remove the ads if it finds that the ad text confuses users as to the origin of the advertised goods and services.
So an Internet surfer who searches Google for the term Air France could see ads next to the results for low-cost airlines and other travel options.
Our focus is first and foremost the user. We believe that showing more ads relevant to a search will benefit users, said Ben Novick, who heads advertising public relations for Google in Europe.
These changes are consistent with European law and will bring the region in line with what we already do elsewhere.
Novick declined to predict how big brands would react to the move or what impact it may have on Google's business in Europe.
He said Google's sales teams were briefing big advertisers in person or via phone about the changes on Wednesday.
Nate Elliott, interactive marketing analyst at research firm Forrester, big brand marketers would not be pleased with the changes, although they would be a boon for retailers who could more easily find shoppers looking for their products.
LVMH won't be happy when a search for 'Louis Vuitton handbags' in German is met with ads for discount Prada handbags instead, he explained. For retailers, though, this is very good news--they can now find and advertise to the Europeans who are looking for the things they sell.
Elliott added that Google's revenues from auctioning off ad space were likely to increase with the changes as more advertisers bid for the same space.
I expect this will have a positive impact on their European revenue, he said.
(Additional Georgina Prodhan; Editing by Michael Shields and Jon Loades-Carter)