Google Inc v ACCC
High Court of Australia  HCA 1
Google's search engine produces 'organic' and 'sponsored' links, the latter of which are paid advertisements. The production of sponsored links occurs through the use of Google's AdWords program which utilizes, among other things, keywords selected by the advertisers. In some cases advertisers had used keywords containing competitors' names.
It was alleged that Google had engaged in misleading and deceptive conduct pursuant to s 52 of the Trade Practices Act (now s 18 of the Australian Consumer Law) by displaying an advertiser's web address as a sponsored link which also included the name of a competitor. Google claimed it was merely a conduit for the advertiser.
The trial judge held that the advertisements (sponsored links) in question contained misleading or deceptive representations, in that they falsely represented an association between themselves and another company. However, Justice Nicholas further held that Google had not made these representations; instead, Google 'acted merely as a conduit, passing on the advertisements of others without endorsing or approving them'. [as paraphrased by French CJ, Crennan and Kieffel JJ at para 55]
The Full Court unanimously found Google had itself engaged in misleading and deceptive conduct and did not merely repeat or act as a conduit for the advertisements.
The High Court unanimously upheld Google's appeal.
Chief Justice French and Justices Crennan and Kieffel held that Google 'did not itself engage in misleading or deceptive conduct, or endorse or adopt the representations which it displayed on behalf of advertisers'. [para 73]
Justice Hayne upheld the appeal but for different reasons. His Honour held that publishing and advertisement made and paid for by a third party may contravene s 52 (para 119) and the relevant test was not (as the other judges found in this case) whether or not Google had endorsed or adopted the representations of the advertisers. However, in this case, the users of the Google search engine would not have understood Google to be making the misleading representations:
(para 82) The facts ... do not, and were not said to, challenge the trial judge's findings that the ordinary and reasonable user would have understood that the sponsored links were advertisements made and paid for by the advertisers and that the representations made in them were not endorsed or adopted by Google. Because the user would not understand Google to be making the representations which the trial judge found to be misleading or deceptive, the ACCC failed to make good the central allegation upon which its case ... depended: that Google made the representations conveyed by the advertisements. For this reason alone, Google's appeal to this Court must be allowed.
Justice Heydon, also upholding the appeal, observed that 'there is no basis on which it could be concluded that ordinary and reasonable members of the relevant class would have regarded Google as adopting the advertisements' (para 148). Google did not create the message contained in the advertisements (para 149).