I think the important point is that if you are selling placement above the first result, trademark squatting means you're actually extorting the trademark holder: Pay up or we'll put a competitor above you. Nobody should have to pay to be the top result for a searcher looking for them directly.

Of course, this problem could alternately be solved by always putting the trademark holder as the top result for the term, and showing relevant ads immediately below. You can still sell to competitors, but nobody feels like they're forced to pay you to own their own name, which is what happens at Google.

Selling the top result is possibly the most problematic thing about Google. And very few nontechnical users can even identify the first organic result. They click the ad thinking it's the top result, not because they found the ad valuable or relevant.

You are right. I understand the temptation from a business perspective, but it is not an ethical practice IMO.

What does the rule look like that enforces that? No ads can be placed that contain the trademark of another company? Would that be too restrictive in practice?

I think it's probably something that'd need to be curated, because the line is probably "I am looking for x, not results about x", sort of like how when your site sees a search for Twitter, it just goes to Twitter. Presumably if I am looking for "Twitter bots", I am not looking for Twitter but products or apps that interact with Twitter and ads are likely to be relevant, not obstructive.

So there should possibly be a way to register specific trademarks as having an authoritative destination that should be the top result, and above any ad placements, but any additional qualifiers in the search term beyond the trademark should exempt this behavior?

What about showing ads from competitors in a sidebar

Then the users can choose themselves if they want to have a look there?

Or two columns: one with, one w/o ads

That would be fine with me. Ultimately if I knew the first listed result when someone searched "mapquest" was mapquest.com and not a malicious ad, I'd switch every senior citizen I know to using that search engine immediately.