Australian competition watchdog slays Google in misleading ads case
Posted in: Legal, Privacy & Security at 03/04/2012 17:58
Google has been found guilty of allowing numerous Australian businesses to post misleading and deceptive advertisements after a court upheld an appeal by the competition watchdog to have an earlier decision overturned.
The judgment, handed down in the Federal Court this morning by Justice Peter Jacobson on behalf of himself and two other Federal Court judges, means that Google will now have to establish a "compliance program" so that advertisers will not be able to post misleading or deceptive advertisements in the future.
ACCC wins appeal over Google
Google has suffered a major blow after the competition and consumer watchdog won its appeal against Google over false and misleading advertising in the Federal Court.
Last year the court found that Google was not liable for ads which appeared as search results that directed Internet users to ads appearing on Sensis's Trading Post Website.
ACCC wins appeal against Google [news release]
Today the Full Federal Court unanimously upheld the Australian Competition and Consumer Commission's appeal filed in October 2011 against Google.
The Full Court declared that Google, by publishing the four advertisements that were the subject of the ACCC's appeal on result pages of the Google Australia website, engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in breach of section 52 of the Trade Practices Act 1974*.
The Full Court also ordered it to put in place a consumer law compliance programme and pay the ACCC's costs of the appeal.
"Google's conduct involved the use by an advertiser of a competitors name as a keyword triggering an advertisement for the advertiser with a matching headline. As the Full Court said this was likely to mislead or deceive a consumer searching for information on the competitor," ACCC chairman Rod Sims said.
The central issue for determination on appeal was whether the primary judge erred in finding that Google did not "make" the representations contained in the four advertisements that were the subject of the appeal.
"The ACCC brought this appeal because it raises very important issues as to the role of search engine providers as publishers of paid content in the online age," Mr Sims said.
"This is an important outcome because it makes it clear that Google and other search engine providers which use similar technology to Google will be directly accountable for misleading or deceptive paid search results," Mr Sims said.
In upholding the ACCC's appeal, the Full Court concluded that "here Google created the message which it presents. Google's search engine calls up and displays the response to the user's query. It is Google's technology which creates that which is displayed. Google did not merely repeat or pass on a statement by the advertiser: what is displayed in response to the user's search query is not the equivalent of Google saying here is a statement by an advertiser which is passed on for what it is worth."
The Full Court also stated that "the enquiry is made of Google and it is Google's response which is misleading... Although the key words are selected by the advertiser, perhaps with input by Google, what is critical to the process is the triggering of the link by Google using its algorithms."
Today's judgment follows an appeal filed by the ACCC in October 2011 against the decision by Justice Nicholas of the Federal Court in relation to certain advertisements appearing on Google's website.
At first instance, the ACCC alleged that Google had engaged in misleading or deceptive conduct by publishing eleven advertisements on Google's search results page. The headline of each of the advertisements in question comprised a business name, product name or web address of a competitor's business not sponsored, affiliated or associated with the particular advertiser. When a user clicked the headline of the advertisement, he or she was taken to the advertiser's website.
The ACCC alleged that the advertisements contained representations that, in summary, by clicking on the headline users would find information as to the competitor's business.
The primary judge found that although a number of the advertisements were misleading or deceptive, Google had not made those representations. Google merely communicated representations made by the advertiser. As such, Justice Nicholas ruled that Google had not breached the Act.
The ACCC appealed the primary judge's decision in relation to four of the eleven advertisements pleaded at first instance.
The central issue for determination on appeal was whether the primary judge erred in finding that Google did not "make" the representations contained in the four advertisements the subject of the appeal.
With respect to the four advertisements the subject of the appeal, the primary judge found that if Google had in fact made the representations, it would not have been able to rely on the publisher's defence (as per section 85(3) of the Act) as Google would have been unable to show that it had no reason to suspect that publication of these advertisements was a breach of the Act.
The appeal was heard on 27 and 28 February 2012 before Keane CJ, Jacobson and Lander JJ.
Civil pecuniary penalties may be imposed for certain contraventions of the Trade Practices Act and Australian Consumer Law for conduct after 15 April 2010. There are no penalties for a contravention of section 52 of the Trade Practices Act or its equivalent - section 18 of the Australian Consumer Law.