Is Google Liable for Representations in Sponsored Links?
In Google Inc v Australian Competition and Consumer Commission  HCA 1, the High Court held that Google had not engaged in misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law (formerly section 52 of the Trade Practices Act 1974 (Cth)).
The ACCC argued that Google engaged in misleading and deceptive conduct on the basis that its program had allowed advertisers to enter the name of competitors as keywords so that when the competitor’s name was entered into the search engine a sponsored link would appear, the content of which represented the sponsored link was to the competitors website, but linking in fact to the advertiser’s company. This was accepted to be misleading and deceptive conduct by the advertiser.
Ordinarily, search requests on Google, provide the user with two options, organic links, which are related to the information entered into the search engine, and sponsored links, which are paid advertisements.
For paid advertisements, Google receives a commission for traffic which is directed to the sponsored link, which forms a huge part of it income on the web.
The production of sponsored links occurs through the use of Google’s Adwords program which utilises keywords selected by the advertiser and generates links through a computer algorithm over which Google had limited control.
Google argued that it was not responsible for the misleading or deceptive conduct because it did not create the sponsored links. The Google search engine merely responded to a user’s search requests by assembling the information supplied to it and it did not endorse or scrutinise the representations of the advertisers.
While Google personnel had assisted advertisers, there was no evidence that Google staff had actively encouraged advertisers to use the names of competitors as keywords or otherwise, created, endorsed or adopted the sponsored links.
In allowing the appeal, the High emphasised that Google had only published or displayed the sponsored links, through information that was provided to them by the advertisers.
In their decision the High Court also endorsed the primary judge’s finding in relation to the ordinary and reasonable user’s understanding of how a sponsored link worked. A reasonable user of Google would have regarded the sponsored links as statements of advertisers that were not endorsed by Google.
Unfortunately, the decision does not entirely relieve controllers or administrators of internet sites of liability for misleading or deceptive information which is posted on those sites.
Search engines such as Google and other publisher will not generally be regarded as the maker of representations contained in advertisements where they are merely passing them on. However, liability may remain where the advertiser has greater control over the content that is posted.
If you seek advice in relation to online copyright or trademark infringements, please contact McLaughlins Lawyers Commercial Litigation department for assistance.