The Australian Competition and Consumer Commission (ACCC) has lost a court case against Google over claims advertising on the internet search giant's main website could be confused with search results.
The case centred around sponsored links by online trading company Trading Post. One such case involved the Newcastle car dealer Kloster Ford. According to the judgement, a search of "Kloster Ford" back in 2005 gave "sponsored link" results that would direct customers to the Trading Post website.
The competition watchdog alleged that because the headline of the link often referred to just the business name alone — for example, Kloster Ford — and then redirected to the Trading Post website, which had no affiliation with the real Kloster Ford, Google and Trading Post were engaged in deceptive conduct.
The ACCC also alleged that Google was misleading consumers by not making it clear that "sponsored links" were advertisements.
In the Federal Court in Sydney today, however, Justice John Nicholas found that while the Trading Post had been misleading in its conduct regarding the advertisements, Google was not engaged in deceptive conduct as it had merely been the messenger between the advertiser and the consumer.
"Google merely communicated what Trading Post represented without adopting or endorsing any of it," Nicholas said.
Nicholas ordered Trading Post to pay $28,000 towards the ACCC's legal costs, while the ACCC has been ordered to pay Google's total legal costs.
ACCC chair Rod Sims said the case served as an important clarification about advertising on the internet.
"All businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers," he said in a statement.
Google welcomed the judge's decision.
"We are pleased with the Federal Court's ruling and that the matter has been resolved. Our guiding principle has always been that advertising should benefit both advertisers and users, and our aim is to ensure that ads are relevant and useful," it said in a statement.
Since the case began in 2007, Google has changed the name of "sponsored links" to "Ads" and has prohibited advertisers from using unrelated business names in the first line of text for an advertisement.