The Federal Court has dismissed allegations by the Australian Competition and Consumer Commission that internet search engine Google engaged in practices likely to mislead consumers.
The ACCC alleged that by failing to adequately distinguish advertisements from search results, Google had engaged in misleading or deceptive conduct.
Justice Nicholas found that the use of the word “advertisement” or an abbreviation of that word, rather than “sponsored links”, might eliminate or reduce confusion in the minds of some users.
However he held that the presentation of Google’s search results did not breach consumer law as most users would have appreciated that “sponsored links” were in fact advertisements.
Since the ACCC instituted these proceedings, Google has changed the description of its advertisements on its search results pages from “Sponsored Links” to “Ads”.
The ACCC was the first regulatory body to seek legal clarification of Google’s conduct from a trade practices perspective. However Google has been scrutinised over trademark use in the United States, France and Belgium. Google has also faced scrutiny overseas, particularly in the EU, in relation to competition issues concerning its search results business.
The ACCC also alleged, and Justice Nicholas found, that the publication of a number of advertisements on Google’s search results page in which the headline of the advertisement comprised the business name, product name or web address of a business not sponsored, affiliated or associated with the advertiser was misleading or deceptive. Trading Post, as responsible for some of the advertisements, was found to have made false or misleading representations and engaged in misleading or deceptive conduct.
The ACCC 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.
“This case is important in relation to clarifying advertising practices in the internet age,” ACCC Chairman Rod Sims said.
“All businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers.”
The ACCC also notes that on the first day of the hearing, 8 March 2010, Google released a “Business Names Policy” which prohibited advertisers’ use of unrelated business names in the first line of ad text, when they are using that name to imply a special relationship with any unrelated third party. This policy was initially applied by Google in Australia and New Zealand only and was expanded to apply to all countries in mid-July 2010.