Google held liable for misleading ads

Ordered to construct compliance program.

The full Federal Court has held Google liable for misleading advertisements published on its AdWords service, overturning a September decision that cleared the search giant of wrongdoing.

Chief Justice Patrick Keane, Justice Peter Jacobson and Justice Bruce Lander this morning ordered Google to pay the Australian Competition and Consumer Commission's appeal costs and potentially costs from the original hearings last year.

As part of the ruling [pdf], Google was also ordered to establish a compliance program to ensure advertisers complied with Australian consumer law.

The program would require the training of company officers and employees as well as a complaints handling system and regular reporting to the ACCC. It would be reviewed within a month of being established.

A Google spokesperson expressed disappointment with the ruling.

"We are disappointed by the Federal Court's decision that Google should be responsible for the content of four particular ads on its platform," the spokesperson said.

"We believe that advertisers should be responsible for the ads they create on the AdWords platform.

"We are currently reviewing our options in light of the court's decision."

Justice Jacobson said today's judgment pertained specifically to advertisements for Harvey World Travel, Honda, Alfa Dog Training and Just 4x4s Magazine.

Each of the advertisements had been uploaded by different account holders for Google’s AdWords service, which embeds sponsored links to members’ sites and advertising campaigns on its own search engine and other websites which implement the service.

But each advertisements purported to be for a company which the account holders did not actually represent.

The full bench found that by publishing each of the four advertisements, Google had implied a connection between the agent that had uploaded or paid for the ads and the companies which the ads purported to identify.

The judges found Justice Nicholas had “erred in failing to conclude that Google engaged in misleading and deceptive conduct”.

“The conduct is Google’s because Google is responding to the query and providing the URL,” the Federal Court found.

“It is not merely passing on the URL as a statement made by the advertiser for what the statement is worth.

“Rather, Google informs the user, by its response to the query, that the content of the sponsored link is responsive to the user’s query about the subject matter of the keyword.”

Original case

The full court’s judgment today overturns part of Justice John Nicholas’ original decision in a case the ACCC brought against The Trading Post and Google Australia over online advertising practices.

The initial judgment found Trading Post Australia was misleading or deceptive in posting advertisements on Google’s AdWords and ordered to pay $28,000.

However, Justice Nicholas declined the ACCC’s argument that Google had made the same representations, based on the notion that normal viewers would not have understood the sponsored links to be ads.

He said at the time he was “not satisfied” that Google had made the same representations or contravened Australian consumer law.

The ACCC lodged the appeal against the ruling concerning Google in October in an attempt, according to chairman Rod Sims, to ensure the internet giant was “held directly accountable for misleading or deceptive paid search results when they have been closely engaged in presenting and publishing those results”.