The case of Google v ACCC looks at the liability of online publishers for displaying false representations made by advertisers. Previously decided cases focus on liability of traditional media organisations, such as television and radio broadcasters and newspapers.

The case has potential implications for anyone that runs a website, including blogs, which incorporates advertising. Further, the case opens up the question of whether liability would extend to social networking-related publishing

Background

The ACCC commenced proceedings in the Federal Court against Google in relation to particular search results displayed by Google for searches between 2005 and 2008.

When a user ‘googles’ a search phrase the Google results page displays both ‘organic’ and ‘sponsored’ or paid links. Sponsored links are created by a paying advertiser and display links to a website of the advertiser’s choice. This is the primary source of Google’s income.

Whether sponsored links are displayed (and the priority of such links) is determined by the AdWords program. AdWords allows advertisers to create and amend their sponsored links through an account system. In doing so the advertiser chooses the headline, web address, advertising text and keywords which will trigger the appearance of the sponsored link in response to a Google search.

The search results were sponsored links (the sponsored links) paid for by The Trading Post, STA Travel, Carsales and Ausdog (the advertisers). It was accepted that the sponsored links contained misleading representations (the representations). The sponsored links, which were displayed when a search of a particular competitor was conducted contained links to the advertisers’ websites instead of a competitors’ website. In other words, a concerted attempt was made to direct traffic away from competitors.

The ACCC alleged that the sponsored links contained representations that were misleading or deceptive, or were likely to mislead or deceive, in that they represented that the advertisers had connections with the competitors, which was false. The ACCC argued that Google had contravened the misleading or deceptive conduct provisions by displaying the sponsored links, and in certain cases, by corresponding with the advertisers, facilitating and assisting them in selecting keywords for the sponsored links.

Previous decisions

At first instance, Justice Nicholson of the Federal Court found that Google had not contravened the relevant provisions. His Honour held that Google had not made the representations, but had acted merely as a conduit and passed on the representations without endorsing or approving them.

His Honour also held that ordinary and reasonable members of the class of people to whom the sponsored links were directed would have understood that the sponsored links were messages from the advertisers, not Google, and that Google was passing them on.

The ACCC appealed the Federal Court decision and disputed the finding that Google had not made the representations. The Full Court however found that Google had engaged in misleading or deceptive conduct. It focused on Google’s part in the process of creating the sponsored links, emphasising that the search results were Google’s response to a user’s insertion of a search term, and that Google’s technology, algorithms and interaction with the search terms produced the sponsored links. In other words, the Full Court found that Google acted positively and not as a “mere conduit’ with respect to the information.

High Court decision

The question on the High Court appeal was whether Google had made or merely displayed the sponsored links. Maintaining the position of the Full Court, the ACCC argued that Google had gone further than merely passing on the sponsored links as in other cases which involved publication in newspaper or television.

Google argued that displaying the sponsored links was not sufficient. It argued that, like other forms of broadcasting and publishing intermediaries, Google had implemented the advertisers’ instructions. Although using different technology, it was argued that this was in principle the same type of service offered by other intermediaries which merely pass on messages from advertisers.

The High Court rejected the ACCC’s submission and the Full Court’s position that Google produced or made the sponsored links and therefore, the misrepresentations contained therein. It held that Google had no control over the user’s choice of search terms or an advertiser’s choice of keywords. Rather it was the advertisers who determined each aspect of a sponsored link; in this way Google was not different to other intermediaries who publish, display or broadcast.

Critically, the High Court held “that the display of sponsored links (together with organic search results) can be described as Google’s response to a user’s request for information does not render Google the maker, author, creator or originator of the information in a sponsored link.”

The Court also held that Google had not adopted or endorsed the sponsored links, but rather had merely published or displayed them. The Court also gave consideration to Google’s submission that it is beyond Google’s expertise to assess whether a company is using a competitor’s name or URL in search criteria, and thus should not be expected to know whether the sponsored links contained misrepresentations.

Wrong ACCC strategy?

The ACCC’s argument was that Google itself had engaged in misleading conduct. The High Court noted that Google personnel had advised and assisted some of the advertisers in selecting keywords to trigger the advertisers’ sponsored links. Google had suggested keywords, and highlighted keywords which had performed well, to the advertisers.

The Court held that this correspondence and conduct was not sufficient to prove that Google, as distinct from the advertisers, had chosen the relevant keywords or had endorsed or adopted the sponsored links. However, such conduct might possibly satisfy the provisions of section 75B.

Section 75B of the Trade Practices Act provides that a person who aided, abetted, counselled, procured, induced or was in any way directly or indirectly knowingly concerned with a contravention of certain Parts of the Act would be a person ‘involved in the contravention’ and could be subject to enforcement and remedy provisions. That is, by assisting the misleading conduct on the part of advertisers to occur, Google could have been considered to have breached the Act.

Justice Hayne in his judgment highlighted that in some cases it is necessary to recognise that a publisher of an advertisement made and paid for by another may be a secondary party to some other person’s contravention of the Act.

The ACCC might well in future pursue a publisher by commencing proceedings against the advertiser and then employing section 75B.

Summary and implications

The High Court’s decision is important for all online publishers – whether a search engine or other public website sponsoring advertising links.

  • The implications of the Full Federal Court decision could have been onerous if not overturned by the High Court: Google would have been required to monitor all advertisers’ sponsored links. Thousands of advertisers sign up to AdWords and the system of sponsored links is a revenue stream for Google. Other online publishers may have been required to review their practices.
  • It is one of the first cases to look at liability of an online publisher for advertisements paid for by a third party but displayed by the publisher. Previous cases discussed liability for published advertisements which did not require input from the viewer or reader. In this way, the case against Google – that it went further by displaying search results as a response to a user request – was unique. The High Court decided that this did not mean it was relevantly different from other publishers or intermediaries.
  • The question of liability of online publishers will depend heavily on the facts of a particular case and whether the publisher is said to make, in the sense of being the creator, originator or author of the representation.
  • The majority held that the question of liability will depend on whether it would be understood by the reasonable user that the publisher endorsed or adopted the representation. However, this approach was questioned by Justice Hayne. It is uncertain then, whether a publisher may avoid liability by expressly or impliedly disclaiming belief in the truth of an advertiser’s representation. It is however, recommended that publishers continue to include express disclaimers to this effect where possible.
  • Justice Hayne also highlighted that the focus of the ACCC’s case had been on the making of advertisements containing misrepresentations, as the contravening conduct. His Honour stated that the ACCC might have instead alleged that merely displaying the sponsored links in and of itself was the contravening conduct, as the Act does not require that a person intended to engage in misleading or deceptive conduct for there to be a breach.
  • The case opens up the question of whether other forms of publishing related to social networking might be caught. For example, if a Facebook user enters a post about a particular brand and as a result of the advertising agreement with Facebook by a competitor, advertisements for that competitor appear on the user’s page. What this case highlights is that there will not be a general exception for online publishers. Rather, the question of whether such conduct is misleading or deceptive will depend on the particular conduct in question. The onus on the publisher may be or ought to be heightened, for example, in circumstances where the advertiser is seeking to advertise known useless or banned products or is engaging in some form of scam, criminal or unlawful conduct.
  • The Court imparted confidence in the average Google user in that it found that the reasonable user would have understood the sponsored links to be statements made by the advertisers, not Google. However, the assumption accepted by all parties – that the sponsored links were misleading or deceptive – failed to recognise a similar awareness in users in relation to the links.
  • It might be argued that a reasonable Google user is aware that often a search for a company generates sponsored links to a competitor providing a similar service, without the user being confused about any association between the two entities other than the common service they provide. The premise of the proceedings may fail to do justice to a Google user’s capacity to understand the type of advertisements directed their way, in respect of at least some of the advertisements in this case.