Sydney, Australia — Global search engine behemoth Google has been found guilty of misleading Australian consumers in 2007 with deceptive ads, including paid advertisements from competitors in search results for businesses, a court upholding an appeal by the competition watchdog.
The full bench of the Federal Court of Appeal in Sydney today overrules part of Justice John Nicholas’ original decision in a case the ACCC filed against The Trading Post and Google Australia over online advertising practices and directed the Mountain View, California- based company to set up a protocol to avoid repeating the practice.
The case revolved around sponsored links in Google search results through its AdWords program by online trading company named Trading Post and STA Travel. The Australian Competition and Consumer Commission (ACCC) sued Google, in the first claim of its kind in the world that makes the search-engine company responsible for the content of ads, according to the regulator.
The (ACCC) asserted that because the headline of an advertisement link in Google search results often referred to the business name that a person was searching for alone, and then redirected to the Trading Post or STA website, which had no affiliation with the real business, Google and Trading Post were engaged in deceptive conduct. The initial judgment found Trading Post Australia was misleading or deceptive in posting advertisements on Google’s AdWords and ordered to pay $28,000.
According to a judgment issued in September 2011, Justice John Nicholas assumed that while the Trading Post had been misleading in its conduct regarding the advertisements, Google was not associated in a deceptive practice, as it had merely been the messenger between the advertiser and the consumer.
“Google merely liaised what Trading Post represented without adopting or endorsing any of it,” Nicholas said.
Chief Justice Patrick Keane, Justice Peter Jacobson and Justice Bruce Lander this morning ordered Google to pay the Australian Competition and Consumer Commission’s appeal costs and potentially costs from the original hearings last year.
As part of the ruling, Google was also commanded to establish a compliance program to ensure advertisers complied with Australian consumer law. The program would require the training of company officers and employees as well as a complaints handling system and regular reporting to the ACCC. It would be reviewed within a month of being established.
The decision makes Google accountable for ads that are displayed and says the company is not merely a channel for the advertiser. Google would have to pay a penalty because the Trade Practices Act, under which it was sued, did not provide for fines for misleading conduct. The company was ordered to pay a share of the costs of the trial and appeal.
“The user asks a question of Google and obtains Google’s response,” the three-judge appeal panel wrote in a 49-page ruling today. “Several features of the overall process indicate that Google engages in misleading conduct.”
Today the full bench of the Federal Court reversed that judgment, stating that Google advertisements with the headline of “Harvey World Travel” or “Harvey World” that redirected to STA Travel website were in breach of section 52 of the Trade Practices Act. Similarly, ads headlined with “Honda.com.au” that redirected to car trading website CarSales, ads headlined “Alpha Dog Training” that linked to The Dog Trainer, and ads headlined “Just 4x4s Magazine” that redirected to the Trading Post website were also in breach of the Trade Practices Act.
“What appears on Google’s web page is Google’s response to the user’s query,” the judgment stated. “That it happens to headline a keyword chosen by the advertiser does not make it any less Google’s response.”
“It is an error to conclude that Google was not involved in the conduct of publishing the sponsored links because it has not adopted or endorsed the message conveyed by its response to the user’s query.”
A Google spokesperson expressed disappointment with the ruling.
“We are disappointed by the Federal Court’s decision that Google should be responsible for the content of four particular ads on its platform,” the spokesperson said.
“We believe that advertisers should be responsible for the ads they create on the AdWords platform. We are currently reviewing our options in light of the court’s decision.”
However, it is estimated that online search advertising in Australia through search engines such as Google is worth around $830 million per year. Besides, Google is the dominant search engine in the Australian market.
The case is Australian Competition and Consumer Commission v. Google Inc. NSD1759/2011. Federal Court of Australia (Sydney).
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