Published on the 06/09/2018 | Written by Heather Wright

‘Growing concerns’ about price comparison sites and search algorithms…

The ACCC has taken aim at travel site Trivago – and served a warning for other businesses over price comparison sites and how algorithms are being used to present search results to consumers.

The consumer watchdog has begun proceedings in the Federal Court against the German headquartered company, which claims to identify the cheapest prices for hotel rooms, alleging the company is in fact prioritising advertisers willing to pay the highest cost per click fee to Trivago.

“Businesses must ensure the nature of search results… is made clear.”

And the Australian Competition and Consumer Commission’s concerns don’t appear to stop at Trivago, with the ACCC chair Rod Sims saying the case “highlights growing concerns the ACCC has in relations to comparison platforms and on how algorithms present search results to customers”.

“We are very concerned that such platforms convey an impression that their services are designed to benefit consumers, when in fact listings are based on which supplier pays the most to the platform,” he says.

“Businesses must ensure the nature of search results, such as if they are sponsored or paid for, is made clear to consumers or they risk contravening the Australian Consumer Law.”

While algorithms are everywhere in modern day life – from Google search, Facebook news feeds, Netflix movie recommendations and Amazon reviews to predicting our credit-worthiness –  there have been increasing concerns about how flawed they can be – just as flawed, in fact, as the human thinking behind them.

In Trivago’s case, the ACCC is alleging that Trivago, which aggregates deals from online travel sites like Expedia and Hotels.com and hotel proprietors and then highlights a single deal, hasn’t been quite as impartial and objective in its hotel price comparisons as it has claimed, prioritising advertisers who paid the highest cost per click fee.

“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,” Sims says.

He says because of the design on the website and representations made, consumers were denied a genuine choice about choosing a hotel, by making choices based on the misleading impression created by the site.

The Commission is also alleging that Trivago created a false impression on the savings by comparing offers for a standard room with an offer for a luxury room at the same hotel.

“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,” Mr Sims said.

Sims told the ABC after looking at the Trivago algorithm the ACCC formed the view it was misleading in the way it presented options to consumers.

The ACCC says its investigation uncovered data that shows consumers who visited Trivago’s website overwhelmingly clicked on the most prominently displayed offers for each hotel.

Trivago has said it will vigorously defend its interests saying it is disappointed by the action the  ACCC has chosen to take.