Google not guilty of misleading and deceptive conduct

February, 2013

On 6 February 2013, the High Court overturned the findings of the full bench of the Federal Court that Google had engaged in misleading and deceptive conduct by publishing and displaying sponsored links as part of their search results.

Background

Google provides an Adwords service which operates in conjunction with its search engine. When a user enters a search term into Google’s search engine, the results include both ‘organic results’ and ‘sponsored links’. Organic results are the links produced by Google, designed to select the most relevant web pages from the internet. Sponsored links are advertisements paid for and created by customers. The Australian Competition and Consumer Commission (ACCC) issued proceedings in the Federal Court of Australia claiming that Google’s display of advertisements as sponsored links was misleading and deceptive conduct pursuant to s 52 of the Trade Practices Act 1974 (Cth) (TPA).

The case at first instance

At first instance, the Federal Court found that although the sponsored links were misleading and deceptive, those representations were not made by Google. It was held that ordinary and reasonable users of Google’s search engine would have understood the sponsored links were advertisements, that were made and paid for by the advertisers, and that Google had not adopted or endorsed the representations made in them. The Federal Court held that Google did no more than represent that that the advertisements were in fact advertisements, and that Google was passing them on for what it was worth.

That decision was overturned on appeal to the Full Court of the Federal Court. The Full Court found Google’s conduct to be misleading, as it was Google that decided whether the advertisements would be published, and in what form.

The High Court Decision

The High Court unanimously allowed the appeal. The majority (of French CK, Crennan and Kiefel JJ) found that Google had not engaged in misleading and deceptive conduct.  Critical to their findings was the nature of Google’s search engine, which they found did not create the sponsored links. Google was found to be merely a means of communication between the advertiser and the consumer, and it was the advertiser of the sponsored link who was responsible for the content. Further, Google had not adopted or supported the advertised links and so had not engaged in misleading and deceptive conduct.

Having found that Google did not engage in misleading and deceptive conduct, the Court did not deal in great detail with Google’s other substantive defence being one based upon section section 85(3) of the TPA. This is sometimes called the publisher’s defence and it is now contained in section 19 of the Australian Consumer Law. The decision does, however, offer some further guidance regarding this defence and the authorities which have considered it.

Practical Implications

Whilst this decision directly deals with search engine providers, it will have wider implications for media intermediaries and publishers of advertisements and content created by others.

Whilst the intermediary might not necessarily be held responsible for the unlawful conduct of those who use their services, each case will turn on its facts and careful consideration should be given to the conduct of the intermediary so as to not be seen to have adopted the statements or opinions of the articles they disseminate or publish.

Contact Mills Oakley

If you or a client of yours requires advice regarding the effect of this decision or advice in respect of commercial disputes or insolvency related issues generally, please contact Mills Oakley’s Commercial Disputes & Insolvency team on +61 3 9670 9111.

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