Google appeal upheld

The High Court today unanimously upheld Google Inc.’s appeal from a judgment of the Full Federal Court which had found that Google had contravened the Trade Practices Act 1974 by engaging in misleading or deceptive conduct.

The ACCC will carefully review the judgment of the High Court to understand whether it has broader ramifications and will consider any consequences for enforcement of the Australian Consumer Law.

ACCC Chairman Rod Sims said, “The ACCC took these proceedings to clarify the law relating to advertising practices in the internet age.  Specifically, we considered that providers of online content should be accountable for misleading or deceptive conduct when they have significant control over what is delivered.”

“The High Court’s decision focused only on Google’s conduct. In the facts and circumstances of this case the High Court has determined that Google did not itself engage in misleading or deceptive conduct,” Mr Sims said.

“It was not disputed in the High Court that the representations made in sponsored links by advertisers were misleading or deceptive.”

“It remains the case that all businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers,” Mr Sims said.

On 3 April 2012, the Full Federal Court held that Google had engaged in conduct that was misleading or deceptive or likely to mislead or deceive by publishing, or causing to be published, four advertisements on the results pages of the Google Australia website. The decision followed a successful appeal by the ACCC against the decision at first instance.

In July 2007, the ACCC initially instituted legal proceedings in the Federal Court against Google alleging misleading and deceptive conduct in relation to sponsored links that were delivered in response to Google searches.

The ACCC proceedings were initially taken against Google Inc. and Trading Post Australia Pty Ltd and heard by Justice Nicholas in the Federal Court at first instance. Trading Post, as the advertiser, was responsible for some of the advertisements and was found to have made false or misleading representations and engaged in misleading or deceptive conduct. The ACCC also alleged that as a result of Google’s significant input into advertisements which appear on its search results pages, it was not only the advertiser but also Google which made the representations found to have breached the Act. However, Justice Nicholas found that Google was “merely communicating” the representations without adopting or endorsing any of them. 

The first instance judgment in relation to Google was appealed by the ACCC to the Full Federal Court who found unanimously that Google had contravened the Trade Practices Act.  Google was granted special leave to appeal to the High Court. The High Court heard the appeal on 11 September 2012.

Since the ACCC began these proceedings in 2007, Google has released a “Business Names Policy” which prohibits advertisers’ use of unrelated registered business names in the first line of ad text, when they are using that registered business name to imply affiliation, partnership or any special relationship with any unrelated third party. This policy was initially applied by Google in Australia and New Zealand but was later expanded to apply to all countries in mid July 2010.

In about November 2010, Google also changed the description of its advertisements on its search results pages on www.google.com.au from “Sponsored Links” to “Ads”. 

The ACCC welcomed these changes to Google’s business practices as they dealt with much of the potential consumer harm that had been identified by the ACCC.