The High Court today has allowed the appeal of Google Inc (“Google”) against the Federal Court’s decision that Google breached s.52 of the Trade Practices Act 1974 (“Trade Practices Act”). In a unanimous decision (available here), the High Court found that Google was not responsible for any misleading and deceptive representations contained in the advertisements placed by customers of its Adwords service.

Background

Google’s Adwords service operates in conjunction with Google’s very popular search engine of the same name. When a user enters a search term into the Google search engine, two kinds of results are returned and displayed: “organic results,” and “sponsored links.” Organic results are the links that are produced by Google when a search term is run through the complex algorithm underlying Google’s software, designed to select the most relevant web pages from the internet at large. Sponsored links are advertisements paid for by customers of the Adwords service.

The Adwords service enables the customers to decide which search terms entered by a user of the search engine (a “search query”) will result in the customers' advertisements being eligible for display. An Adwords customer selling, for example, international flights, could decide that its advertisements would be displayed when a user searched for the terms “flight,” “holiday” or even something oblique like “getaway.” Relevantly, the Adwords customer could also decide to trigger their advertisements when the search query contained the name, or actual website, of their competitors.

In one of the examples relevant to this case, a search for the term “Harvey World Travel” produced advertisements for STA Travel, a competitor of Harvey World Travel. This was not by chance – it was because STA Travel chose “Harvey World” as a trigger for its advertisement. Google’s technology informed Adwords customers of the most successful search queries relevant to the customer’s business.

In the initial Federal Court trial, the Australian Competition and Consumer Commission (“ACCC”) claimed that the sponsored links in question were misleading and deceptive, because it would not be sufficiently clear to an ordinary user that they were advertisements. This claim was rejected by the initial trial judge and not pursued by the ACCC in its appeal to the Full Federal Court.

However, on appeal, the Full Federal Court agreed with the ACCC’s claim that Google breached the Trade Practices Act by providing the medium through which misleading and deceptive advertisements were communicated to the public.

The issue on appeal was whether or not Google was liable for misleading and deceptive representations contained in advertisements of Adwords customers.

Decision

In a joint judgement, French CJ, Crennan and Kiefel JJ (Hayne and Heydon JJ wrote separate judgements), emphasised the automatic nature of Google’s search engine, and the Adwords service itself:

The automated response which the Google search engine makes to a user's search request by displaying a sponsored link is wholly determined by the keywords and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored links that it publishes or displays.

Accordingly, the majority (supported by Heydon J) found that by providing a service for advertisers to reach the public at large, Google was ultimately no different from other “intermediaries, such as newspaper publishers…or broadcasters…” Heydon J went further, rejecting the idea that in this context there was any relevant distinction between “advertising in online media and advertising in traditional media.”

The majority, supported by Heydon J, looked beyond the fact that Google provided the means to facilitate the misleading and deceptive conduct of its customers. The court was not convinced that this facilitation alone meant Google had breached the Trade Practices Act. Google displayed the advertisements, but it was not the “maker” of the information in the advertisements: “Google has no control over a user's choice of search terms or an advertiser's choice of keywords…even with the facility of keyword insertion, the advertiser is the author of the sponsored link.”

Heydon J largely supported the majority’s view, stating the question as whether or not the relevant section of the public would perceive that Google, as the “carrier” or “conduit” of a particular representation could be said to have adopted that representation:

Here, there is no basis on which it could be concluded that ordinary and reasonable members of the relevant class would have regarded Google as adopting the advertisements. Neither the trial judge nor the Full Court reached that conclusion.

Conclusion

At a high level, this case raises similar issues to other recent technology cases where the company providing the technology or is the intermediary between users seeks to avoid any liability for the content it carries or publishes. An example is the iiNet case, where the High Court decided that an internet service provider is not liable for copyright infringements of its users.

The High Court has clearly determined that Google is in a similar position to a television network or newspaper, and is not liable for the content of advertisements placed by its advertising customers, unless it can be proven that Google is more actively involved in the creation of the content. Providing the technology to assist advertisers create advertisements or to display the advertisements was not sufficient to turn Google from an intermediary to an actor.

The High Court’s reasoning does not necessarily assist Google in relation to the non-advertising parts of Google’s system, such as the organic search results or the Google auto-complete function. Google’s liability in Australia for the content of organic search results is likely to be the subject of further judicial review.