Google held responsible for misleading and deceptive advertisements

Australia

In Australian Competition and Consumer Commission v Google Inc ([2012] FCAFC 49, April 3 2012), the Full Federal Court has unanimously upheld an appeal by the Australian antitrust regulator, the Australian Competition and Consumer Commission (ACCC), in relation to Google's AdWords service. The Full Court found that Google was itself responsible for the content of certain misleading advertisements appearing on the results page of the 'google.com.au' website, and that, by publishing or causing the publication of those advertisements, it had directly engaged in misleading and deceptive conduct. 

The case arose because some advertisers had bid on, and were using, their competitors' trademarks as Google AdWords. The appeal focused on four specific AdWord paid advertisements, or 'sponsored links', which appeared in response to particular search queries. In each case, the heading of the advertisement included a third party's trademark or domain name that, when clicked on, linked to the website of a competitor which had purchased the relevant brand as an AdWord. 

The case centred around the question of whether Google was responsible for the content of the advertisements, and was therefore engaging in misleading and deceptive conduct contrary to Section 52 of the Trade Practices Act 1974, now Section 18 of the Australian Consumer Law (the Australian Consumer Law is Schedule 2 to the Competition and Consumer Act 2010 (Cth), the new name for the Trade Practices Act). The issue of trademark infringement was not raised in this case, although trademark infringement in the context of AdWords has been considered in other jurisdictions, including by the Court of Justice of the European Union and, most recently, by the US Court of Appeals for the Fourth Circuit in Rosetta Stone Ltd v Google Inc

Google argued that it was not responsible for the misleading effect of the sponsored links displayed on its search results page. It contended that its position was analogous to that of the owner of a billboard or telephone network, and consumers would understand that advertisements carried on those media were statements by the relevant advertiser, not Google.

The ACCC argued that Google took an active role in the preparation, dissemination and publication of the advertisements and, as a result, Google itself made the relevant representations. In the ACCC's view, this was the case because:

  • Google tightly controls the content of results generated by a search;
  • Google's AdWords program permits advertisers to target their advertisements; and
  • Google's internal processes closely supervise the available keywords for an advertisement.

In a unanimous judgment, the Full Court upheld the ACCC's appeal, and found that Google had engaged in misleading and deceptive conduct by displaying the offending sponsored links. On the facts, the court decided that Google was "much more than a mere conduit", by reason of its close involvement in the process of choosing which sponsored links to display in response to a particular search query, as well as the content of those advertisements. The court decided that it was Google that triggered the link to the competitors' keywords using its algorithms; the user asks a question of Google, and Google displays the sponsored links in response to that query. 

Importantly for those involved in more traditional forms of advertising, the judges specifically differentiated Google's situation from the case of a billboard owner, newspaper publisher or television broadcaster that simply displays an advertisement of another "for what it is worth". The difference is that, in Google's case, Google created the message it presented.

The Full Court ordered Google to establish and implement a 'Consumer Law Compliance Program' to address the issues identified by the court. Google has not yet formally indicated whether it intends to seek special leave to appeal the decision to the High Court, although press reports indicate that it is likely to do so.

Rebecca Sadleir, Allens Arthur Robinson, Sydney 

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