Google defends AdWords in High Court of Australia

Google has told the High Court of Australia that a ruling by the full bench of the Federal Court that Google is responsible for misleading ads in its search results could have wider implications outside of just online advertising.

The case centred around sponsored links in Google search results through its AdWords program by online trading company Trading Post and STA Travel. In April, 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, and on Tuesday made its case for why Google is not adopting or endorsing the advertisements that have appeared in its search results.

Google's barrister Tony Bannon told the court that finding Google responsible for what it produces from an inquiry could have 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."

The ACCC's barrister Simon White argued that while the advertisers pick the words and the headline for the link, it is ultimately Google that makes the connection between what the user searches for and the ad that is ultimately displayed.

"It was Google's system that displayed the ad in this way in response to the search term 'Just 4x4s Magazine' and embedding the search term into the headline. Only Google could do that. Google determined whether there was a sufficient relevance or association between the ad and the search term such that the search term would be included in the headline," he said.

Justice Susan Kiefel questioned whether Google's AdWords system is "simply allowing the advertiser's words to go forward" and whether that could be considered misleading conduct.

"It is the end result of many steps involving Google that has resulted in the display of the ad in response to the search term that has a blue, clickable headline in collocation with the URL," White said. "That is, with respect, all we would submit of Google's doing.

"It is Google that determines whether that ad responds to the query and makes available the functionality of the blue, clickable headline and permits the insertion of the keyword into that blue, clickable headline. We would submit that is the making of a representation. That is Google's representation. It is making a representation — there is an association between your search term and this URL," he said.

Justice Dyson Heydon suggested that if Google seeks to avoid this sort of event from occurring, it would "annihilate" its business. White disagreed.

"Your Honour, they have in place policies and procedures to prevent this from happening. They have policies in relation to trademarks, and they have policies in relation to deceptive business names. This is just part of their business," he said. "They take on this role, then they have to put in place, presumably, proper mechanisms to ensure that this is not abused."

The court has reserved its decision.