Google Searches and Misleading Conduct: Google Inc v Australian Competition and Consumer Commission

By Sarah Mulcahy and Jeannie Marie Paterson

Google v ACCC Case Page

In Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 the High Court held that Google had not engaged in misleading or deceptive conduct contrary to s 52 Trade Practices Act 1974 (Cth) (TPA) (now s 18 of the Australian Consumer Law (ACL)) in publishing ‘sponsored links’ in response to web page searches. The Australian Competition and Consumer Commission (ACCC) argued that Google engaged in misleading and deceptive conduct because its program allowed advertisers to enter the names of competitors as keywords so that a ‘sponsored link’ to the advertiser’s company would arise when the competitor’s name was entered into the search engine. Although the ‘sponsored links’ by the advertisers were misleading or deceptive, Google was held not to be responsible for the misleading or deceptive conduct because it did not author the ‘sponsored links’, nor did it endorse the misleading representations of the advertisers.

However, the decision does not relieve those who control or administer internet sites of liability for misleading or deceptive information posted on those sites. In this case, the links were generated by a computer algorithm over which Google had limited control. But in other situations where an administrator has greater control, it is possible that the administrator may still be liable for the misleading or deceptive conduct of posters or advertisers.

What were the different search terms generated by Google?
A Google user who enters a search term will obtain two types of search results:

  • ‘organic search results’, being links to webpages ranked in order of relevance to the user’s search; and
  • ‘sponsored links’, which respond to the search term by producing sites from advertisers that would pay Google an amount each time a user clicked on the sponsored link.

Whether a sponsored link is displayed in a list of search results is determined by Google’s AdWords program. An advertiser, through the use of an AdWords account, can specify keywords that will trigger the sponsored link to appear in the search results of a Google user.

What were the ‘sponsored links’ in this case?
The case considered ‘sponsored links’ for STA Travel, Carsales, Ausdog and the Trading Post.

  • An STA Travel sponsored link appeared in response to the use of the Google search term ‘harvey world travel’. The result was a sponsored link to organic search results for Harvey World Travel, a competitor to STA Travel.
  • A sponsored link to classified car advertising business Carsales was generated when the Google search term ‘honda.com.au’ was used.
  • A sponsored link for The Dog Trainer Pty Ltd (Ausdog) was generated in response to a Google search for Ausdog’s competitor, Alpha Dog Training.
  • A sponsored link for the Trading Post Australia Pty Ltd (Trading Post) that appeared on 29 May 2007 in response to a Google search for ‘just 4x4s magazine’.

The trial judge found, and it was not disputed, that each of the STA Travel, Carsales, Ausdog and Trading Post advertisements set out above were misleading or deceptive. The ACCC argued that by publishing these advertisements, Google had also engaged in misleading or deceptive conduct. This was on the basis that Google had inserted search terms chosen by its customers in the sponsored links. The argument was rejected by the first instance judge but accepted by the Full Court of the Federal Court. The Full Court of the Federal Court found that Google had engaged in misleading and deceptive conduct and made declarations that Google had contravened s 52 of the TPA in publishing the search results. A key point of the High Court appeal was that the Full Court had interpreted the sponsored links as ‘Google’s response to the user’s insertion of a search term into Google’s search engine’.

Why was Google not responsible for the misleading or deceptive search results?
In the High Court the majority justices, French CJ, Crennan and Kiefel JJ (with whom Heydon J agreed), affirmed that the correct approach to apply in a case such as this was that laid down in the earlier decision of Yorke v Lucas [1985] HCA 65 at [7]. The majority held, at [15] (emphasis added):

It has been established in relation to intermediaries or agents that the question whether a corporation which publishes, communicates or passes on the misleading representation of another has itself engaged in misleading or deceptive conduct will depend on whether it would appear to ordinary and reasonable members of the relevant class that the corporation has adopted or endorsed that representation.

The High Court held that Google only published or displayed the sponsored links, and did not author or endorse them. Even with the facility of keyword insertion, the ACCC’s contention that Google produced the advertisements was rejected. As such it was not necessary for the Google to reply on the so-called ‘publisher’s defence’ in s 85(3) of the TPA (s 209 of the ACL).

The Court rejected the ACCC’s submission that Google produced the sponsored links.

The links were produced by the advertisers. The Google search engine merely responded to a user’s search requests by assembling information. While Google personnel had ‘advised’ and ‘assisted’ advertisers, there was no evidence that Google staff had actively encouraged advertisers to use the names of competitors as key words or ‘otherwise created, endorsed or adopted the sponsored links’. Moreover, whilst Google had a system to prevent the use of certain key words, it would be difficult to establish whether a trader was a competitor or associate of the advertiser without explicit notification. Thus, Google was comparable to other intermediaries, such as newspaper publishers or broadcasters, who publish, display or broadcast advertisements, and this analogy was not displaced by the fact that the information in question was provided via the internet.

The Court also endorsed the primary judge’s findings in relation to the ordinary and reasonable user’s understanding of how a sponsored link worked. These users would have regarded the sponsored links as statements of advertisers that were not endorsed by Google. Ordinary and reasonable Google users would not have reached the conclusion that Google had endorsed the representation given that the advertisements were displayed away from actual search results derived from the search terms inputted by the user.

As noted above, this decision does not mean those who control or administer internet sites can escape liability for misleading or deceptive information posted on those sites. The pivotal issue here was control, and Google lacked control over the material displayed. However if an administrator of a site endorsed misleading or deceptive conduct, such as by responding to the misleading conduct with a positive comment, or even allowing such a comment to remain on the site after having become aware the material was misleading, they may be held to have adopted or endorsed misleading or deceptive material and be liable as a result.

AGLC3 Citation: Sarah Mulcahy and Jeannie Paterson, ‘Google Searches and Misleading Conduct: Google Inc v Australian Competition and Consumer Commission’ on Opinions on High (29 October 2013) <http://blogs.unimelb.edu.au/opinionsonhigh/2013/10/29/mulcahy-paterson-google/>.

Sarah Mulcahy is a third year JD student at Melbourne Law School.

Dr Jeannie Marie Paterson is a Senior Lecturer at Melbourne Law School.