The High Court of Australia has dismissed a misleading and deceptive conducts case brought against search engine giant Google, ruling that Google does not create sponsored links.
The case centred around sponsored links in Google search results through its AdWords program by online trading company Trading Post and STA Travel between 2005 and 2008. In April last year, the full bench of the Federal Court ruled, on appeal from the Australian Competition and Consumer Commission (ACCC), that Google advertisements with the headline of "Harvey World Travel" or "Harvey World" that redirected to an STA Travel website were in breach of section 52 of the Trade Practices Act. Similarly, ads headlined with "Honda.com.au" that redirected to car-trading website Carsales, ads headlined "Alpha Dog Training" that linked to The Dog Trainer, and ads headlined "Just 4x4s Magazine" that redirected to the Trading Post website were also in breach of the Trade Practices Act.
Google appealed the decision to the High Court in September, and this morning the High Court ruled that Google did not create the sponsored links featured in search results.
"Google did not create the sponsored links that it published or displayed. Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations," the High Court said in the summary of its judgment (PDF).
"Accordingly, Google did not engage in conduct that was misleading or deceptive."
In the High Court hearing last year, Google's barrister Tony Bannon told the court that finding Google responsible for what it produces from an inquiry would have had wider implications.
"The ramifications for the Full Court's approach are not limited to online advertising, but would extend to any travel agent, for example, who, in response to an inquiry from somebody who wanders in saying, 'I want to travel somewhere' and says, 'Europe, is it — you might like these brochures' and hands out a string of brochures because they perceive it might be relevant to their area of interest — and because it is the travel agency's response, that makes them responsible for the content of everything in those advertisements," Bannon said.
"That is an untenable outcome, we respectfully submit."
Google praised the judgment in a short statement.
"We welcome the High Court's unanimous decision that Google cannot be held responsible for the ads that advertisers create for Google's search engine," the company said.
ACCC chairman Rod Sims said that the regulator took up the case to clarify the law around misleading or deceptive advertising online, and the court did not rule that the ads themselves were not misleading.
"The High Court’s decision focused only on Google’s conduct. In the facts and circumstances of this case the High Court has determined that Google did not itself engage in misleading or deceptive conduct," Sims said.
“It was not disputed in the High Court that the representations made in sponsored links by advertisers were misleading or deceptive. It remains the case that all businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers."
The ACCC has been ordered to pay Google's costs.