The startup community in Southeast Asia is up in arms over Rocket Internet again. This time, it’s about their perceived unethical bidding of keywords and placement of ads to siphon from competitors to their own websites.
In Indonesia, Zalora was “caught” buying Google AdWords against smaller rival Below Cepek, although the Rocket Internet company later retracted the ads and issued a vague apology.
In Singapore, Zalora engaged in a similar practice against online cosmetics store Luxola, and the campaign was even extended to multiple countries in the region.
Since the issue was brought out into the open, however, Zalora seemed to have tweaked its approach:
Before. Screencapped by TechinAsia.
After.
In Southeast Asia, this tactic has in fact been practiced under-the-radar for a few years. Since 2011, Philippine daily deal sites Ensogo and Metrodeal were found buying ads on the search result pages for CashCashPinoy and Deal Grocer, and the campaigns are ongoing even now:
Metrodeal on CashCashPinoy’s search result page.
Ensogo on Deal Grocer’s search result page.
So it’s not just Rocket Internet that’s doing it. The practice is so common worldwide that there’s a term for it: Competitive Keyword Advertising. It’s controversial for sure, and battles have been fought in courtrooms to settle scores, but often with cruel results for trademark owners.
The root of the unhappiness stems from how small business owners are disadvantaged against larger counterparts. Google AdWords placements work through a bidding process, which means bigger players have the upper hand due to their financial muscle. It’s no level playing field when smaller competitors don’t have the wherewithal to outbid the likes of Rocket Internet.
Trademark infringement comes into play here. Competitive Keyword Advertising isn’t evil per se, especially if the ad doesn’t cause any confusion and Google users are clear that the ad refers to a different company.
But a line is crossed when ad buyers deliberately use a competitor’s trademark in its copy, leading consumers to think that the Zalora ad, for example, is referring to Luxola. Ethically, the needs of consumers rise above all since e-commerce companies are ultimately serving shoppers.
Unfortunately, in terms of legal or arbitrary recourses, small business owners will find it tough going. Suing a trademark infringer is a costly, time-consuming process with no guarantee of victory.
Google has a well-documented arbitration process for such disputes which allows trademark owners to prevent ad buyers from using their names.
The problem though is that ethics is as useful as soiled tissue paper here. The process is subjected to intellectual property law, and again small business owners are disadvantaged.
Given the global nature of e-commerce businesses, a trademark infringer could easily place ads on the search pages of multiple countries. Small business owners, on the other hand, would unlikely have registered his or her trademarks at that point in each of these countries, a necessity since intellectual property does not cross borders.
And since Google requires trademark owners to show proof of their ownership, a registered trademark would have an advantage over an unregistered one since the former provides more clear-cut documentation.
Unfortunately, the process of registering trademarks can take a long time. I was told that it takes one to two years in the Philippines. And that’s an eternity in the startup world.
This is a reality that e-commerce companies in Southeast Asia must deal with. It can be a good omen: If competitors are willing to duel over keywords, there’s surely plenty of spoils to be won in the region’s e-commerce sweepstakes.
For startups and small business owners, their best recourse for now might be to apply public pressure on these large companies to change their practices. It’s an approach that appears to have the best shot of working.
Since the law favors the rich, it’s far better to appeal to the consumer’s moral sense.
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