After a resounding loss against the ACCC in the Full Federal Court, Google has succeeded on appeal in the High Court.
The High Court ruled that Google was not responsible for misleading advertising links which had been chosen by advertisers. It found that Google had acted as a mere conduit between advertisers and search users. The decision explores when an intermediary might be responsible for passing on misleading information.
Advertisements on Google appear as paid search results, in a separate box ahead of other results. It is a targeted form of advertising as the advertised results are meant to relate to the search terms entered.
A number of advertisers took advantage of this by choosing keywords associated with competitors. This resulted in their links being displayed as (paid) search results in response to search terms associated with competitors.
There is little doubt that this is misleading conduct by the advertisers. Interestingly, the ACCC chose instead to pursue Google instead of the advertisers.
The ACCC argued that Google was not just passing on the misleading links from advertisers to search users; it was actively involved in bringing them to the attention of search users (via its technology and Adwords program). The ACCC claimed that Google, in displaying the misleading results, represented to search users that the paid results related to the search terms when in fact they did not.
Google argued that it was merely an intermediary or conduit which passed on the information from advertisers to search users. Google argued that if anyone was at fault, it was the advertisers who chose the keywords which triggered the misleading results.
The key issue in the case was whether Google 'made' misleading representations or whether it merely passed them on.
Full Federal Court
The Full Federal Court disagreed with Google's claims. It held that Google was 'much more than a mere conduit'. By publishing its 'sponsored link' advertisements, the Full Federal Court found that Google was telling a search user that the advertiser's message and web address were an answer to the user's query. As such, even though ordinary and reasonable users would have understood that Google had not endorsed the contents of the 'sponsored link' advertisements, Google had still engaged in misleading or deceptive conduct.
In a unanimous decision, the High Court allowed Google's appeal.
The leading judgment found that Google merely published or displayed the misleading representations made by advertisers. Google had no control over a user's choice of search terms or an advertiser's choice of keywords. Contrary to the Full Federal Court's opinion, the High Court held that Google's technology is merely an 'automated' process which 'assembles the information provided by others'. The Court stated that to 'the extent that it displays sponsored links, the Google search engine is only a means of communication between the advertisers and consumers'.
The Court analogised Google's role with that of newspaper publishers or broadcasters which publish advertisements of others.
The Court said that there was no question that ordinary and reasonable users of Google's search engine would have understood that the 'sponsored links' were created by advertisers and not by Google.
The High Court's decision applied established principles in the more novel context of online advertising. In our view, the Court took a common sense approach in its application of those principles to the publishing of online advertisements by search engines.
While the High Court cleared Google's actions in this case, other online advertising businesses should take note that the decision does not mean that traders or publishers can never be held liable for publishing advertisements created by third parties. The question remains, whether the trade or publisher has 'made' a misleading representation. Each case would turn on its facts.
In fact all businesses need to be wary of information created by a third party that it passes on from a third party to another, whether it's advertisements, reports, advice or other documents or information. Businesses should ensure that it is clear that they are simply passing on documents/ information prepared by another and that they are not, providing any endorsement or making any representation as to accuracy.
It is worth noting two final points:
- A further defence available to Google which was not considered in full detail is the 'publishers' defence'. This defence provides a commercial publisher with immunity where it can establish that it did not know and had no reason to suspect that its publication of an advertiser would amount to a contravention. It became unnecessary for the High Court to deal with this defence as the primary allegation of misleading and deceptive conduct was not made out.
- The case concerned whether Google was directly liable for misleading or deceptive conduct. A separate argument may be had that by operating its Adwords program and publishing misleading or deceptive advertisements, Google may have 'aided, abetted, counselled or procured' the contravention. Whether or not the ACCC or any other party would bring such a claim against Google in the future remains to be seen.
This article was prepared with the assistance of Ryan Ratilal, Lawyer and James Thomas, Lawyer.
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.