In Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 (6 February 2013) the High Court overturned a decision from the Full Court of the Federal Court of Australia that Google was conveying misleading and deceptive representations in contravention of section 52 of the Trade Practices Act 1.

The Facts

The ACCC claimed that particular search results displayed by Google amounted to misleading or deceptive conduct, thereby contravening section 52 of the Trade Practices Act 1974. The Google search engine responds to users' search requests by keeping an index of billions of accessible web pages, divided into two categories. When a user 'searches' a search term, Google displays two types of search results: the 'organic results' and the 'sponsored links'.

'Organic results' link the user to web pages in order of relevance to the search terms they have entered, which is calculated by a complex mathematical formula. These 'organic results' always appear free of charge.

A 'sponsored link' is a form of advertisement. The advertiser pays Google a sum of money each time a user selects the 'sponsored link' when it appears in their search. The 'sponsored link' is attached by Google to a list of search terms pre-selected by the advertiser so it appears on the screen during a search – this system is known as Google AdWords.

It was not in dispute that some of the 'sponsored links' were misleading or deceptive, by representing that a particular company was linked to another when in fact they were competitors. The question was whether the publication of these misleading or deceptive 'sponsored links' amounted to misleading or deceptive conduct on the part of Google.

The Parties' Submissions

The ACCC relied on s 52 of the TPA which stated that:

"A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive".

In essence the ACCC submitted that Google was the maker or creator of the 'sponsored links', relying on the fact that the company had used their technology to display the 'sponsored links' in response to search requests from users.

The ACCC argued that this established Google's liability irrespective of the fact that it was the advertisers who were the source of the content for the sponsored links.

Google submitted that the company had always admitted its responsibility for publishing or displaying the advertisements. However, this was insufficient for a finding of misleading or deceptive conduct under section 52 of the TPA.

Furthermore, Google contended that the author of the 'sponsored link' is the author, creator or originator of information and that the extent of Google's involvement is an automated response to a user's search request.

The Decision

In reaching its decision, the High Court assessed the origin of the representation and ultimately accepted Google's submission that the company cannot be described as a maker, author, creator or originator of information in a 'sponsored link' merely by displaying the links together with 'organic search results'. The High Court in this sense drew the analogy between Google, as a function for displaying advertisements, and other intermediaries, such as broadcasters and newspaper publishers.

The fact that Google actively offered and arranged a set of special search terms as part of the AdWords system did not change the essential nature of its conduct. Google was found in effect to be only a means of communication between advertisers and consumers.

The practical effect of a different finding in this case would have been potentially significant. Google, along with any similar service (not necessarily limited to internet search engines) may have found itself under a positive obligation to test the accuracy of submitted advertisements, where those advertisements involve some more 'active' involvement by the publication such as the AdWords system, prior to publication.

This would impose such a heavy burden on the publisher that systems such as AdWords may have been rendered impractical in jurisdictions where laws similar to the Trade Practices Act exist.

Footnotes

1The Trade Practices Act 1974 has been renamed the Competition and Consumer Act 2010, effective 1 January 2011, which includes as a schedule the Australian Consumer Law. Section 52 of the Trade Practices Act has been replaced by section 18 of the Australian Consumer Law.

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