Russell Waters, Phillips Ormonde Fitzpatrick
The Australian Competition & Consumer Commission (ACCC) took action against Google and its Australian subsidiary Google Australia in relation to sponsored links – AdWords – displayed by Google on search result pages generated by its well-known search engine.
The ACCC’s action was based on the Trade Practices Act 1974 (Cth), now the Australian Consumer Law. The ACCC’s submissions made it clear that it did not contend that Google’s acts were intended to be misleading, deceptive or confusing, however the relevant sections of the Trade Practices Act are strict liability and no intention needs to be shown.
The ACCC contended that Google’s behaviour amounted to misleading and deceptive conduct because consumers believe that Google’s search results place the most relevant pages at the top of the list. The ACCC also argued that the search result pages did not adequately distinguish between paid advertisements – sponsored links – that appeared above and to the right of the search results and the results of the organic search created using the algorithms applied by the Google search engine. Finally, the use of keywords in the headlines corresponding to trading, names, product names or website addresses belonging to competitors of the actual advertisers was misleading and deceptive in the ACCC’s opinion.
In particular, the ACCC was concerned with use of the keywords Kloster Ford and Charlestown Toyota in sponsored links arranged by the Trading Post through Google’s AdWords. The Trading Post was a competitor of the businesses trading under the Kloster Ford and Charlestown Toyota names.
Google responded that the advertisements were clearly identified as sponsored links and the overall layout of the search results did not lead to deception or confusion. It also said that the ACCC had not shown that the use of competitor’s keywords was likely to mislead or deceive and even if it was, it was the advertiser, not Google, who made any misleading or deceptive representation.
Finally, Google asserted that it had a defence under s 85(3) as a person whose business is to publish or arrange for publication of advertisements and who had received the advertisement in the ordinary course of business and did not know or have a reason to suspect that publication of the advertisement would breach the Trade Practices Act.
The Australian Federal Court found that the use of the keywords Kloster Ford constituted a misleading and deceptive act by the Trading Post, in that it suggested an association and affiliation between the business run under the name Kloster Ford and the Trading Post, when this was not in fact the case at that time. The Court also found that the use of the keywords Charlestown Toyota by the Trading Post also suggested an association and affiliation between the business run under the name Charlestown Toyota and the Trading Post, but the Court found that the evidence did not show that such an association did not exist; accordingly it was not proved that the use of the keywords constituted misleading and deceptive conduct.
Concerning the shaded background behind the sponsored links appearing at the top of the search results and the words “Sponsored Links” appearing on the shaded background or immediately above the sponsored links appearing to the right of the organic search results, the Court ruled that this would not lead ordinary and reasonable users of the Google search engine to believe the sponsored links were not advertisements or were no different to the organic search results. Accordingly Google’s actions were not found to be misleading or deceptive conduct.
Finally, the Court found that ordinary and reasonable users would be unlikely to view advertisements appearing on the Google search result pages as being endorsed or adopted by Google, so Google was not liable in relation to the misrepresentation found in relation to the Kloster Ford keywords.
Since the evidence in this case was filed, Google appears to have changed the reference to sponsored links on its search result pages to read “Ads”, presumably to address ACCC criticism that the term sponsored links did not make it clear who was sponsoring whom.