Google escapes liability for advertisers' misleading and deceptive conduct

Commercial Disputes eBulletin - 7 February 2013

Summary

  • Publishers on the internet or via other media can be liable for misleading and deceptive advertisements, statements or representations made by other parties if that publisher does more than merely pass on the advertisement or statement. Further, if the publisher is seen to “endorse” or “adopt” the representation, then they are more likely to be held liable.
  • What is misleading or deceptive is judged by whether "ordinary and reasonable" members of the audience for the advertisement or statement would be likely to have been mislead or deceived.
  • In this case, the High Court found that the ordinary and reasonable users of Google understand that the representations conveyed by the sponsored links were those of advertisers and had not been adopted or endorsed by Google. The claim by the ACCC against Google was rejected unanimously by the High Court.

 

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Background

As most readers would be aware, a typical Google search result will display both “organic” results generated by Google’s algorithms, and “sponsored” results which have been generated as a result of paid advertisements by businesses using Google’s ‘AdWords’ program. 

The Australian Competition and Consumer Commission (ACCC) commenced proceedings against Google in July 2007, alleging that certain sponsored links which appeared on Google's results pages were misleading and deceptive. 

The ACCC claimed the sponsored links falsely suggested an association between the advertisers who had paid for those sponsored links, and the companies or brands whose names formed part of the search results generated by the user’s search.  

Of specific concern to the ACCC were sections of advertisements that were generated by the search term being “inserted” into the heading for the advertisement. For instance, searches for "Honda .com.au" generated sponsored link results which displayed the words “Honda.com.au” as a clickable banner, which when clicked would actually take users to the website of an unrelated a second hand car dealer with no association to Honda. 


History of proceedings

At first a federal court judge found that, although the sponsored links were misleading and deceptive, the representations had been made by the advertisers and not Google. 

On appeal the Full Court of the Federal Court, unanimously held Google itself had engaged in misleading or deceptive conduct by publishing the sponsored links as search results. While the advertisers themselves did not appeal the decision, Google was granted special leave to appeal to the High Court. 

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The High Court's decision

On 6 February 2013, the High Court ruled in Google's favour.

Did Google engage in misleading and deceptive conduct?

The Court examined whether Google was the maker or creator of the sponsored links. The ACCC alleged Google was liable because it had used its technology to display the sponsored links in response to search requests. The Court found that the advertisers were the authors of the sponsored links, being responsible for determining the keywords and other content of the sponsored links. 

Further, the Court found that the Google technology merely assembled information provided by others for the purpose of displaying advertisements, in a way similar to the role of a newspaper publisher or television broadcaster.

The perception of the sponsored links amongst the 'ordinary users'

The Court rejected the ACCC's central allegation that Google had made the misleading representations contained in the sponsored links. 

The Court held:

  • Google's conduct was not misleading or deceptive; and 
  • that "ordinary and reasonable" users of Google would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. 

Comment

While the decision perhaps represents more of a return to traditional principles around misleading and deceptive conduct, rather than a radical new finding, it is important to note that Google’s defence of the claim would have been significantly more difficult, if not impossible, had the paid advertisements not been clearly identified as such. 

To that end, while Google’s stated tenet of “don’t be evil” may go a long way towards avoiding liability for misleading and deceptive conduct, publishers would be well advised to also adopt the far simpler touchstone of “be transparent”. 

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Further information

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