In its Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 (6 February 2013) decision (available here), the High Court unanimously overturned a decision of the Full Federal Court. The lower court unanimously found that Google Inc (Google) had engaged in misleading or deceptive conduct when its search engine published a competitor’s web address in sponsored links appearing as a result of a user’s search request.

At Issue

When an internet user initiates a search using Google’s search engine, the search engine displays in response both ‘organic’ search results and ‘sponsored links’. The former are links to web pages which are ranked in order of relevance as determined by Google’s proprietary algorithm, and the latter are a form of paid advertisement in which the advertiser selects the parameters that determine the sponsored link’s headline, corresponding web address and brief advertising text.

The ACCC contended that by publishing or displaying the impugned advertisements, Google had engaged in misleading and deceptive conduct as a principal – that is, Google was the maker or creator of the sponsored links – relying on the fact that Google’s technology caused the display of the sponsored links in response to a user’s search enquiry.

Procedural History

The trial judge held that whilst the impugned advertisements conveyed false representations, Google was a mere conduit and did not make them. Moreover, ordinary users of Google’s search engine would have understood the sponsored links to be advertisements that Google had neither adopted nor endorsed.

The Full Federal Court, on the other hand, framed the issue differently, namely, ‘[W]hether Google’s conduct in response to the user’s interaction with Google’s search engine was misleading’. In allowing the appeal of the trial court, the Full Federal Court relied on the idea that Google ‘responded’ to the entry of the user’s search term using its own algorithms.

The High Court Rationale

The High Court rejected the ACCC’s argument that Google made or created the sponsored links. The High Court noted that the advertiser wholly determines each relevant aspect of a sponsored link, and the mere display or publication of the results does not render Google the maker, author, creator or originator of the information contained within. Google’s underlying technology merely assembles information provided by others, and accordingly Google is not unlike other intermediaries such as newspaper publishers or publishers that serve as a means of communication between advertisers and consumers. The High Court also endorsed the trial court’s finding that ordinary and reasonable users would have understood the sponsored links to be statements made by advertisers which Google had not endorsed.

Impact

The decision clarifies the ‘publisher’s defence’ and provides further guidance regarding the possible liability of ‘creating’ advertising content through the use of automated technological mechanisms.

However, the High Court’s reasoning leaves open the possibility of liability related to other aspects of search engine functions such as organic search results or auto-complete. Those or similar functions may be Google’s next judicial battleground.