update Google Australia has labelled claims of misleading and deceptive conduct made against the search engine provider by consumer watchdog ACCC as being without merit.
The ACCC today started legal action against Google and the Trading Post for alleged misleading and deceptive conduct over sponsored links that appeared on the Google Web site. The Trading Post is owned by Sensis, a division of Telstra.
"Google Australia believes that these claims are without merit and we will defend against them vigorously," said Google Australia spokesperson Rob Shilkin.
"They represent an attack on all search engines and the Australian businesses [that] use them to connect with customers throughout the world," he said.
The Australian Competition and Consumer Commission is alleging the Trading Post contravened the Trade Practices Act when the business names "Kloster Ford" and "Charlestown Toyota" appeared in the title of Google sponsored links to the Trading Post's Web site in 2005.
Both Newcastle-based car dealerships compete against the Trading Post in automotive sales.
The ACCC also alleges Google engaged in misleading and deceptive conduct by causing the Kloster Ford and Charlestown Toyota links to be published on the Web site.
Google also failed to adequately distinguish sponsored links from 'organic' search results, the ACCC alleged.
The ACCC is seeking declarations that the Trading Post contravened sections 52 and 53(d) of the Act, declarations that Google contravened section 52 of the Act and injunctions restraining Trading Post from representing through sponsored links an association, sponsorship or affiliation with another business where one does not exist.
Of greater gravity to the Internet industry, the ACCC is also seeking injunctions restraining Google from "publishing sponsored links of advertisers representing an association, sponsorship or affiliation where one does not exist," and injunctions restraining Google from "publishing search results that do not expressly distinguish advertisements from organic search results."
Google has already received the support of Peter Coroneos, Chief Executive of the Internet Industry Association, who suggests Google is being singled out for a practice common to the Internet marketing industry.
Google Australia is a member of the IIA. But Coroneos told ZDNet Australia that was not the reason the association was voicing its opinion on the case.
"We think this case has ramifications for the entire industry," he said. "I'm perplexed that the ACCC has chosen to move directly to litigation, rather than engage in discussion."
Coroneos refused to comment as to whether such paid search practices were common across the industry. "We are not commenting on the merits of the case, just the approach the ACCC has taken."
AAP contributed to this story.