Australia: Google Adwords Appeal


On Tuesday 3 April 2012 the Full Court of the Federal Court of Australia - consisting of Chief Justice Keane, Justice Jacobson, and Justice Lander - handed down a joint decision overturning the earlier decision of Justice Nicholas on 22 September 2011.

The Full Court allowed an appeal by the Australian Competition and Consumer Commission ("ACCC") against Google, finding Google liable for engaging in misleading and deceptive conduct under Section 52 of the Trade Practices Act 1974 (Cth); legislation since replaced in form but not in substance by the new Australian Consumer Law within the remodelled Competition and Consumer Act 2010 (Cth).

At trial, Justice Nicholas had ruled that some aspects of Google's Sponsored Links regime contained misleading or deceptive content, but did not think that Google had 'made' that content. The Full Court, upon considering how Google's AdWords and Sponsored Links operated, disagreed. Google had indeed 'made' many of the relevant misleading representations and were not a 'mere conduit' or 'mere carrier'.

What you need to know

  1. When deciding if content providers are 'mere carriers' or if they are 'making' representations which may be misleading, the Courts will examine the circumstances surrounding the provision of that information.
  2. There is cause for caution if content providers are manipulating or targeting information based on user-input. Some content providers could be found to be 'making' the representations within advertisements if their systems are helping to produce said advertisements.
  3. It will be difficult to establish the defence under the Australian Consumer Law that a content provider, such as Google, received the advertisement in the ordinary course of business and that 'it did not know and had no reason to suspect' that the 'publication of the advertisement would constitute misleading or deceptive conduct' when content providers have advertising expertise and carefully designed advertising systems in place.

Despite the Full Court's unanimous joint decision, Google is said to be considering its options and a High Court challenge may yet be on the horizon.

The Facts

As canvassed in our update of 29 September 2011, the original litigation had concerned the usage of the Google AdWords system. In the Sponsored Links and AdWords regime, advertisers pay Google to display Sponsored Links triggered by certain search queries. Those Sponsored Links appear separately but in conjunction with the so-called 'organic' unsponsored search results; typically appearing above or to the right of the organic search results. Each Sponsored Link contains a headline which is a link that will ordinarily take a user to a website of the advertiser.

Sometimes, the headline consists of keywords selected by the advertiser which may be a business or product name of the advertiser's competitor. A number of specific examples were alleged at trial and on Appeal. For instance, a headline might read 'Business X' but the link below would actually display 'Business Y'. Various representations which were established in that regime were ruled misleading.

However, for Google, the crux of the decision fell upon whether Google had 'made' the representations contained within the Sponsored Links. At trial Justice Nicholas did not think so. The Full Court, on Appeal, disagreed.

On appeal, the ACCC alleged that Google, in publishing the advertisements, was making the representations concurrently with the advertisers. They also argued that Google was not merely 'passing on' the advertisement but were engaging in acts to 'prepare, create, or approve the advertisement'; also evincing that they were 'making' the representations. Their Honours saw three themes in the ACCC's argument:

  1. That Google 'tightly' controls the content of results generated by a search as well as the way the results are presented;
  2. That Google's AdWords program permits advertisers to target their advertisements; and,
  3. That Google's internal processes serve to closely supervise the available keywords for an advertisement.

Google argued their position was similar to that of a billboard owner – where consumers readily understand that the statement is being made by the advertiser, and not by the publisher. Google also reiterated that it did not believe the content of some of the advertisements was misleading or deceptive. It also believed that it could rely on the so called 'Publishers Defence' of Section 85(3).

The Decision

The key question was whether Google had 'engaged' in conduct that was likely to mislead or deceive. Had Google 'made' the representations or had they acted as a 'mere carrier'? To answer that, the Full Court examined the circumstances surrounding the operation of Sponsored Links.

Upon consideration of how the system worked, the Full Court did not believe Google could frame itself as a mere carrier or the advertisements. When users search the Google system, they make an enquiry of Google and it is Google that sends the response. The Sponsored Links displayed always corresponded with whatever search the user typed at the relevant time. In the words of the Full Court, 'the conduct is Google's because Google is responding to the query' and is 'providing' the link.

Their Honours also thought the complex systems Google had developed to support the AdWords system was indicative of them 'making' the representations. The process of selecting Sponsored Links was not a random event. Advertisers may supply the AdWords, but it was the Google algorithms that triggered the display of the relevant links.

As such, the Full Court reversed Justice Nicholas' original finding that Google had not 'made' the misleading representations. They had indeed assisted in producing the representations and some of those representations were misleading or deceptive.

The Full Court gave very limited credence to Google's argument that the content was not misleading for ordinary consumers, and relied on Justice Nicholas' findings in that regard.

For some of the content, Google argued that the misleading decoy links were names that were not well known, and therefore unlikely to be misleading. However, the Full Court pointed out that the mere fact that advertisers had paid to include those business names within the list of words that would activate their advertisements was evidence enough.

The Full Court also agreed with Justice Nicholas in that Google could not discharge the onus to prove the Publishers Defence; namely, that it did not know and had no reason to suspect that the publication of the advertisement would constitute misleading or deceptive conduct. The Court thought that 'no reasonable person' in Google's position could have failed to suspect that providing a competitor's name as a trigger was misleading or likely to mislead.

At trial, Justice Nicholas' had briefly considered the defence unproved, but because he did not believe Google had 'made' the representations its operation was not necessary. But now, unlike in Justice Nicholas' trial judgment, Google was found to have 'made' the representations – and without establishing this defence – was then liable under the Trade Practices Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.