Google not responsible for misleading content from sponsored links

Google Inc v Australian Competition and Consumer Commission [2013] HCA 1

The High Court ruled that Google did not breach the Australian Consumer Law by acting as a ‘conduit’ to misleading content from sponsored links.

Google Inc operates a popular internet search engine. Google offers businesses an advertising service – companies can advertise on Google’s website via ‘sponsored links’. Sponsored links appear adjacent to the user-generated search results. They look similar to the user-generated results. They are themselves partly generated by the search terms which the user typed in. They are usually titled ‘sponsored links’ and occasionally have a different shade as background.

The ACCC issued proceedings in the Federal Court in July 2007. The ACCC claimed that Google breached s 52 of the Trade Practices Act 1974 (Cth) [now s 18 of the Australian Consumer Law].That provision prohibits a corporation from engaging in conduct which is likely to mislead or deceive. The ACCC claimed that s 52 was breached in two ways. First, the sponsored links were insufficiently distinguishable from the user-generated search results. Second, the content of some sponsored links was misleading, so that passing them on was misleading.

With respect to the ACCC’s first claim, the primary judge found that the presentation of sponsored links would not mislead an ordinary web-user. The ACCC did not further pursue this claim on appeal. With respect to the ACCC’s second claim, the primary judge found misleading the content of those examples of sponsored links which formed the basis of the ACCC’s claim. The primary judge also found that Google neither endorsed nor adopted the content of those sponsored links – Google acted merely as a ‘conduit’ to third party misrepresentation.

Whether Google was a mere conduit, or something more, depended on the extent of Google’s involvement in creating the impugned sponsored links. The Full Federal Court and the High Court differed on this point, and the contrary outcomes arrived at by the two appeal courts stemmed from this difference in the evaluation of the same evidence, and the legal conclusion to be drawn from it.

Sponsored links are generated by businesses entering information into an online program (AdWords) owned by Google. AdWords is a self-serve system for advertisers. Advertisers enter into AdWords their own keywords, as well as the text they wish to see displayed in their advertisement, and their business URL. They also enter a bid amount. Whether a business’s advertisement will ultimately be displayed as a result of a user’s search will depend on the match of the advertiser’s chosen keywords with the user’s search terms, as well as the bid. If a user selects the business’s URL in the sponsored link, a fee is paid to Google in proportion to the amount of the bid.

While the generation of sponsored links as a result of a user’s search is largely automated, there was evidence at first instance that Google offered initial assistance in the selection of keywords to advertisers who requested it.

The Full Federal Court unanimously found that Google’s involvement in offering initial assistance to advertisers meant that Google was more than a mere conduit. The High Court unanimously rejected this assessment of Google’s initial assistance. The majority (French CJ, Crennan and Kiefel JJ) stated that while such evidence “was not irrelevant”, it “never rose so high as to prove that Google personnel, as distinct from the advertisers, had chosen the relevant keywords, or otherwise created, endorsed or adopted the sponsored links” [71]. In separate judgments, Hayne J [82] and Heydon J [149] made similar assessments of the extent of Google’s initial assistance.

As Google was not found to have made a misrepresentation, it was not necessary for the High Court to consider the ‘publisher’s defence’ provided by s 83(5) of the Trade Practices Act 1974 (Cth).


Richard Scheelings – CommBar Profile

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