The Australian Competition and Consumer Commission (ACCC) has instituted proceedings in the Federal Court against trivago NV (Trivago), alleging that the accommodation search engine site misled customers over price.
It is alleged by the ACCC that Trivago made misleading pricing representations in its television advertising and on its website from at least December 2013 that breached Australian Consumer Law.
The ACCC alleges that the way Trivago's website aggregates deals offered by online travel sites created an impression to customers that it was offering up the best deal.
According to the watchdog, Trivago ran TV advertisements that showed its website as an impartial and objective price comparison service that would essentially help customers find the cheapest hotel room prices. But the ACCC argues that in fact, Trivago's website prioritised advertisers who were willing to pay the highest cost per-click fee.
Trivago's main source of revenue is the cost-per-click payments it receives, where advertisers are charged a fee each time a user clicks on one of their offers, and an investigation by the ACCC found that customers who visited Trivago's website "overwhelmingly" clicked on the most prominently displayed offers for each hotel.
"Based on Trivago's highlighted price display on its website, we allege that consumers may have formed the incorrect impression that Trivago's highlighted deals were the best price they could get at a particular hotel, when that was not the case. Trivago based its rankings on the highest cost per click it would receive from its advertisers," ACCC Chair Rod Sims said.
"We allege that because of the design of Trivago's website and representations made, consumers were denied a genuine choice about choosing a hotel deal, by making choices based on this misleading impression created by the Trivago website."
It is believed that Trivago ceased airing TV ads featuring representations about price in April 2018.
Additionally, the ACCC alleges that Trivago created a false impression of savings for customers by comparing pricing for a standard room with an offer for a luxury room.
"We also allege that by not making genuine room price comparisons, consumers would likely have paid more than they otherwise would have for the same hotel. Further, hotels may have lost potential business as a result of this alleged conduct," Sims added.
"This case highlights growing concerns the ACCC has in relation to comparison platforms, and on how algorithms present search results to consumers."
Sims took the opportunity to put businesses on notice to ensure the nature of search results -- such as if they are sponsored or paid for -- is made clear to consumers otherwise risking contravening Australian Consumer Law.
In response, Trivago told ZDNet it would be defending the action taken by the ACCC.
"Trivago helps thousands of Australians find their ideal accommodation through personalised searches and a deep supply of hotel prices and other information. Our priority is to enable Australian travellers to find their ideal hotel," a spokesperson said.
"We agree with the ACCC's earlier public statement that 'comparator websites can assist consumers to make more informed purchasing decisions when comparing what are often quite complex products, and can promote healthy competition by assisting small or new service providers to compete more effectively'.
"We are disappointed by the action the ACCC has chosen to take in relation to Trivago and will vigorously defend our interests."
Updated at 5:30am AEST, August 27, 2018: Included statement from Trivago.
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