On 22 September 2011, the Federal Court dismissed allegations made by the ACCC that Google engaged in misleading and deceptive conduct by failing to adequately distinguish advertisements from search results.  Nicholas J held that most users would have realised that “sponsored links” were in fact advertisements.  He noted that the use of the word “advertisement” or a shorter form might eliminate confusion for some users.  Nicholas J held that the publication of advertisements on Google’s search results page in which the headline of the advertisement contained the business name, product name or web address of a business not sponsored, affiliated or associated with the advertiser was misleading and deceptive.  However, he held that the advertiser, not Google (which he viewed as “merely communicating” the representations) was liable for this conduct.

After the ACCC instituted proceedings, Google changed the description of its advertisements to “Ads” and released a “Business Names Policy” which prohibits advertisers’ use of unrelated business names in the first line of an advertisement in order to imply a relationship with an unrelated third party.

On 13 October 2011, the ACCC announced it had filed an appeal against the decision in respect of four advertisements.