A federal court in Melbourne has found online hotel booking site Trivago guilty of misleading customers about hotel room rates.
Founded in the Netherlands in 2005, the website has over 150 million users worldwide, making it the world’s fourth-largest online hotel booking site.
Although Trivago promotes itself as a site that can help users identify the cheapest hotel rooms, actual rankings are largely based on whoever pays it the most, rather than on impartial price comparisons, according to the Australian Competition and Consumer Commission (ACCC), the country’s consumer watchdog, which brought Trivago to court.
Data specialists testified that Trivago used an algorithm that gave priority to advertisers who were willing to pay the highest cost-per-click fee, which was its primary source of revenue.
The ACCC has sought orders for penalties, declarations, injunctions and costs. Trivago might receive a fine of several million Australian dollars.
More importantly, the company’s brand image is definitely tarnished.
Trivago was listed on the Nasdaq in 2016. Since peaking out in 2017, its market value has steadily declined to the current level of around US$1 billion.
This article appeared in the Hong Kong Economic Journal on Jan 24
Translation by Julie Zhu
[Chinese version 中文版]
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