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Complaint: GoTo favors sister firms

An auto Web site claims that search engine sells search results to the highest bidder--gave preferential treatment to a competitor.

    An Internet entrepreneur who made a bid for top billing in results from the shopping search engine funded in part by Bill Gross' idealab contends that gave preferential treatment to a competing auto site that Gross also has invested in.

    Kelly Britt, president of, claims that his request to be the top-ranked bidder for about 75 search terms on was shunted aside when Cars Direct, a new-car site that launched last week, made a similar request and got top billing. idealab also is an investor in Cars Direct, which located in the same building as

    But Jay Gallinatti, vice president of sales for, called it a coincidence that Cars Direct got higher placement, noting that the service lists advertisers in the order of their bids per lead and that Cars Direct pays more. lets online merchants say how much they'll pay for each referral by the shopping search engine. The bidding sites are listed in order of how much they'd pay, with additional, non-paying merchants also included in some categories. Bids range from a penny per clickthrough to more than $2 on some categories.

    "Idealab has financial stakes in both companies and it's using our search terms to their own company's advantage and our disadvantage," said Britt, who has created a Web page that outlines his complaints. "That is where we see a huge conflict of interest."

    "Even if it were a total coincidence, it would still seem incorrect that's own sister company is allowed to bid against customers," Britt added.'s Gallinatti said the service treats all customers alike.

    "We don't treat any idealab company differently than any other company," Gallinatti said. "This happens every day-- somebody outbids somebody else. It's a coincidence that when [Britt] was in the process and he requested his bid to be increased, that another person in ['s] office was working with Cars Direct."

    Britt, who also uses for his Web-hosting business, said he believes in its approach.

    "The model they have is a good model. Obviously I think there's a problem in the way it's being executed," said Britt, who has filed complaints with the California Attorney General's office and the Federal Trade Commission. The California agency said it has no ongoing investigation of but that a complaint filed last week would not have appeared in its system yet.

    For starters, Britt wants to disclose that affiliated companies may bid for placement on the service, but he really thinks bids should be disallowed from firms that idealab has invested in. Without that, he said, could use bids from related companies to inflate prices for placements on the service.

    Founded in March 1966, idealab is an incubator for Internet companies, that are funded and supported by Gross, an entrepreneur who made millions from an accounting software firm sold to Lotus/a> and later founded educational software firm Knowledge Adventure with his brother.

    Gross now invests in start-ups. Idealab companies include City Search, which went public last month as Ticketmaster Online-Citysearch, eToys, and Wedding Channel. He also invested in, which had a controversial public offering for which the underwriter later was ordered to pay $400,000 in damages. is a 3-year-old firm with four employees, owned by Britt. It has a marketing arrangement with Auto-by-tel in which furnishes leads on buyers in return for information in Auto-by-tel's used car database.