October 3, 2012

Google Challenges Misleading or Deceptive Conduct Findings in High Court

Google has been subject to scrutiny over its search results in the US, France, Belgium and the EU – however, the Australian Competition and Consumer Commission (ACCC) is the first regulatory body to seek legal clarification around Google’s conduct from a trade practices perspective.

FEDERAL COURT – FIRST JUDGEMENT

The ACCC commenced proceedings against Google in November 2007 alleging that by failing to adequately distinguish advertisements from search results, Google had engaged in misleading or deceptive conduct.  The ACCC based its case on the contention that the overall layout and appearance of the results page failed to sufficiently distinguish between organic search results and advertisements.
The Federal Court found that the use of the word “advertisement” or an abbreviation of that word, rather than “sponsored links”, might eliminate or reduce confusion in the minds of some users, however, Google’s presentation of search results did not breach consumer laws.  Since the ACCC began the proceedings, Google has changed the description of its search results advertisements from “Sponsored Links” to “Ads”.

FULL FEDERAL COURT – THE APPEAL BY THE ACCC

On 3 April 2012, the ACCC appealed the first decision and the Full Federal Court overturned it.  The Court upheld the appeal on the basis that Google search results were a response to a Google search query by a user, which represented that the content of the “sponsored link” was responsive to the user’s query.  In essence, the Court found that it was actually Google itself providing a response to a search enquiry, rather than being an objective ‘mere conduit’ for search results.

HIGH COURT – GOOGLE’S APPEAL

On 25 June 2012, Google was granted special leave by the High Court of Australia to appeal the decision of the Full Federal Court, and the appeal will be heard over the next few months.  In other jurisdictions (including the US), courts have assumed that Internet users understand that “sponsored links” are advertising tools – this may have an impact on the High Court’s decision.
Whatever the outcome, the decision promises to be an illuminating one in respect of the online advertising space.  Any Australian Internet based business integrating advertisements with content should pay particular attention to this case.