Google is being sued in an Australian court for "potentially misleading consumers," reports At issue are the sponsored ad spots Google sells at the top of some search results above the first organic result. The Australian Consumer and Competition Commission (ACCC) alleges that Google has encouraged deceptive practices among businesses by selling the advertising in that top position on its search results pages, while telling consumers that its results are organic.

Specifically, the ACCC names online car dealership Trading Post, which purchased sponsored ads on Google in 2005 for search results relating to searches for the names of other New South Wales car dealerships. The ACCC argues that by using the name of those dealerships in their ads, the Trading Post links appeared to point to the official dealership web sites or implied an affiliation that did not exist. The ACCC alleges that this is a breach of Australia's Trade Practices Law.

The judge in the case was not overly impressed with the ACCC's arguments, calling their case "opaque and repetitious." He adjourned the proceedings until October 4th pending clarification of the involvement of Google subsidiaries, Google Australia and Google Ireland, which were also named in the suit.

While I don't find Google's sponsored listings -- which are clearly marked -- overly deceptive, I do find it unfair that companies with deeper pockets can essentially bid for the top placement using keyword text that makes their ad appear to link to their competitor's web site.

That would be like 411 setting up a similar bid-based advertising system, so that when you called information and asked for the number for Domino's Pizza, you had to hear the information for Pizza Hut first. Worse, you wouldn't even be told that it was Pizza Hut's number you were hearing.