Google under fire on ‘click fraud’ details

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Google came under more criticism for its handling of financial information on Thursday after it released details on its corporate blog of a $90m settlement of a “click fraud” class-action lawsuit.

Click fraud, where advertisers fall victim to invalid clicks on their ads – often by competitors – that they then have to pay for, has been viewed by analysts as a risk factor to Google’s continuing success. It undermines the confidence of the search engine’s customers in the advertising system that produces 99 per cent of Google’s revenues.

At Google’s analyst day last week, Eric Schmidt, chief executive, said click fraud was no longer a material issue. Sergey Brin, co-founder, said the group was doing a good job of rooting it out and restricting it to a “small fraction” of clicks.

In a blog note on Thursday, Henry Blodgett, former Merrill Lynch internet analyst, said the $90m settlement of one case proved click fraud was still material to Google and the situation was “getting ridiculous” with “yet another Three Stooges PR move” of announcing this on its corporate blog.

The news came a day after Google was forced to make an SEC filing admitting it had inadvertently released financial information during its analyst day. It had mistakenly included notes from an internal strategy meeting in a Powerpoint presentation provided to analysts.

Google was sued in Arkansas last February over click fraud and on Thursday said it was close to a $90m resolution of the case that it thought the judge would approve.

It allows advertisers to apply for reimbursement of invalid clicks made up to 60 days prior to notifying Google. Under the lawsuit agreement, it would open up this window to whenever the questionable clicks occurred. It is offering credits for eligible invalid clicks up to the value of $90m including legal fees.

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