Google Successfully Searches for Win in the High Court

The extent of liability of Internet intermediaries for the material they publish on the Internet continues to be point of dispute in Australia and around the world.

In the latest case to examine this issue, Google Inc v ACCC [2013] HCA 1, the High Court has unanimously found that Google did not engage in misleading and deceptive conduct under s52 of the Trade Practices Act 1974 (Cth) (TPA) by displaying certain sponsored links created by advertisers using the AdWords program. Section 52 of the TPA has since been replaced by s18 of the Australian Consumer Law. Both provisions are in almost identical terms.

Image by Kinologik

The Advertisements

The appeal concerned several groups of sponsored links that were created by advertisers using the AdWords program. The advertisers selected the names of competitor companies when specifying advertisement headlines, text and keywords that would trigger the appearance of the sponsored link.

For example, one such advertisement referred to ‘Just 4x4s Magazine’ in the headline and text. However, the website address directed users to www.tradingpost.com.au, falsely suggesting an affiliation between the 2 publications, which both contained advertisements for the sale of motor vehicles.

The History of the Case

The Australian Competition and Consumer Commission (ACCC) initiated proceedings against Google in the Federal Court in July 2007. The ACCC claimed that the sponsored links conveyed misleading and deceptive representations and that by publishing the results, Google engaged in conduct in contravention of s52 of the TPA.

The primary judge held that:

• the representations contained in the sponsored links were misleading and deceptive; and
• Google had not made the misleading and deceptive representations, but merely acted as a conduit.

The ACCC appealed to the Full Court, which unanimously found that Google had itself engaged in misleading or deceptive conduct by publishing the search results.

Google appealed to the High Court.

The Arguments in the High Court

The High Court focused solely on whether Google had engaged in conduct directly in contravention of s52 of the TPA.

The ACCC argued that Google’s liability arose because Google was the creator of the sponsored links, and used its technology to display the sponsored links in response to search requests made by users of the Google search engine.

In contrast, Google argued that each relevant aspect of the sponsored link – the headline, the advertising text, the advertiser’s URL, the keywords and the use of keyword insertion – was specified by the advertiser, and that Google merely implemented the advertiser’s instructions.

The test applied by the High Court was whether it would appear to ordinary and reasonable users of Google that Google had adopted or endorsed the misleading and deceptive representations.

The Outcome

The High Court found that Google did not engage in misleading or deceptive conduct as:

• Google did not create the sponsored links that it published or displayed. The advertiser was held to be the author of the sponsored links;
• Google purely responded to a user’s request for information. In displaying sponsored links, the High Court noted that Google is only a means of communication between advertisers and consumers. In this sense, Google is not relevantly different from other intermediaries, such as newspaper publishers (whether in print or online) or broadcasters (whether radio, television or online) who publish, display or broadcast the advertisements of others; and
• ordinary and reasonable users of Google would have understood that the sponsored links were created by advertisers, that the representations conveyed by the sponsored links were those of the advertisers, and that the representations were not adopted or endorsed by Google.

Key Takeouts

• Internet intermediaries

Google has welcomed the decision, and other Internet intermediaries are no doubt breathing a sigh of relief. The case confirms that websites are likely to be treated like other media outlets who publish advertisements. Unless they create and/or endorse a misleading advertisement, they are unlikely to be found to have engaged is misleading and deceptive conduct.

• Advertisers

In this case it was not disputed that the advertisements were misleading or deceptive. Advertisers who engage in misleading and deceptive conduct by, for example, using the names and trade marks of competitors as Google search terms, will continue to be held to be liable for such conduct and must therefore take care not to mislead or deceive consumers in both offline and online media.

A Word of Caution…

The outcome in this case was dependent on the way the ACCC framed its case.

The High Court was careful to confine the case to its facts, noting that the outcome does not depend upon the application of any general rule about the liability of publishers for publishing misleading or deceptive advertisements made and paid for by another.

Each case of misleading and deceptive conduct will necessarily turn on the words of the statute and the particular facts of each case.

In response to this decision, ADMA is currently working on specific guidelines, which are expected to be finalised and available in May 2013.