New Zealand: Liability for ad content on Google stays with advertiser

Brief Counsel
Last Updated: 14 February 2013
Article by John McKay, Garth Gallaway and Pheroze Jagose

Most Read Contributor in New Zealand, September 2016

Google is not liable for misleading advertisements or manipulated links – the originator of the link is.

So ruled the High Court of Australia in a case which we expect will be influential with the New Zealand courts.

The Google search engine and AdWords programme

A search on the Google search engine will generate two types of result: "organic search results" and "sponsored links". Organic search results are links to web pages listed in order of relevance, as determined by Google's algorithm. A sponsored link is a form of advertisement. Such links appear separately and typically consist of a headline with a link to a web page, the address of the web page and some brief advertising text.

The AdWords programme allows an advertiser to specify "key words" which, when entered into the Google search field, trigger the appearance of the advertiser's sponsored link. So typing "coke" in the search field is likely to reveal a sponsored link to the Coke website.

Misleading or deceptive conduct

This system runs into difficulty with trade practices legislation1 when the "key words" connect to a sponsored link in a way that may mislead or deceive the user. For example, typing "coke" and getting a sponsored link to Pepsi.

A sponsored link appearing in the context of a particular search may constitute a misrepresentation that:

  • there is a commercial association between the company represented by the user's search term, and the company which was the subject of the sponsored link (when there was none), and/or
  • by clicking the sponsored link the user would be taken to a website for which the user had searched (when in fact the link takes the user to the advertiser's website).

The case

In Google Inc v Australian Competition and Consumer Commission2 , the ACCC sued over four incidents of Google advertising.3

The determinative issue in the appeal was whether it was Google (rather than the advertisers) which made the allegedly misleading or deceptive representations by publishing or displaying the sponsored links in response to the user's Google key word search.

Google is not the creator of the misrepresentation

The majority of the High Court overturned the Federal Court of Appeal4, finding that Google did not engage in the misleading or deceptive conduct as principal. The advertiser is the author of the sponsored link.

Google is a mere conduit of the information, not its creator:

"The automated response that the Google search engine makes to the users' search request by displaying a sponsored link is wholly determined by the key words and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored link that it publishes or displays." [68]

And, as a conduit, Google is no different to other traditional broadcasters or publishers:

"...Google is not relevantly different from other intermediaries ... who publish, display or broadcast the advertisements of others. The fact that the provision of information via the internet will – because of the nature of the internet – necessarily involve a response to a request made by an internet user does not, without more, disturb the analogy between Google and other intermediaries." [69]

Heydon J observed that there could be several negative policy repercussions if Google was deemed to be the "maker" of the representations simply because of the operation of its technological facilities. Such a finding would create "an exceptionally wide form of absolute liability" for those who publish information and would create an inappropriate distinction between the treatment of online and traditional advertising mediums.5

The High Court agreed with the primary judge that the ordinary and reasonable users of Google would have an elementary understanding of how the search engine worked. Such users would appreciate that sponsored links were fundamentally different to organic search results and were statements made by advertisers which Google had not endorsed, but was merely passing on "for what they were worth".

Implications for New Zealand

As we have seen in defamation cases, the Google case illustrates that there is nothing special about the internet, at least when it comes to legal principles. The legal outcomes in the parallel world of "hard copy" publication still provide instructive analogies.

That said, judges are also mindful of the importance of the internet and the practical difficulties "intermediary" parties such as search engines would face if exposed to liability for being a mere conduit for content. And when considering whether conduct is actually misleading, the courts are mindful that users of the internet probably have a basic understanding of what they are looking at and who really put it there.

Who (if anybody) owns the underlying intellectual property is a separate battleground, but our courts are still likely to look at Google Inc when dealing with the upcoming dispute between InterCity and Nakedbus over the latter's use of "inter city" in connection with their Google ads.


1 Specifically, s52 Trade Practices Act 1974 (the equivalent of s9 of our Fair Trading Act 1986).

2 Google Inc v Australian Competition and Consumer Commission [2013] HCA 1, 6 February 2013.

3 See paragraphs [34] - [52].

4 Australian Competition and Consumer Commission v Google Inc [2002] FCAFC 49.

5 At [151].

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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