Yesterday’s victory by Google over the Australian Competition and Consumer Commission (ACCC) signals a High Court that is sensitive and fair to intermediaries on the Internet.
The web giant won a six-year legal battle over allegations it misled customers by displaying sponsored links for one company in search results for a competitor.
The Google-ACCC judgment comes almost a year after the High Court dismissed an appeal by the film industry body AFACT that absolved ISP iiNet of liability for copyright infringement.
Although the ACCC and AFACT are distinct — one is a federal regulator, the other a formidable copyright maximalist lobby group — their common struggle was to make an internet intermediary such as an ISP or a search engine liable for the misconduct of its customers.
Both cases saw the High Court judges find no liability on bona fide internet companies that happened to publish or host legal breaches of certain users.
In the latest case, the High Court unanimously allowed Google’s appeal over the ACCC over a charge of misleading or deceptive conduct or representations.
High Court Justices Hayne and Hayden delivered separate judgments that ultimately agree with the joint judgement of fellow High Court Justices French, Crennan and Kiefel.
Who to sue
There was no dispute that the advertisements or sponsored links on Google’s results themselves may be in breach of the then Trade Practices Act.
For example, a search query for Harvey World Travel could lead to a sponsored link for one of its competitors, STA Travel, which could mislead someone unfamiliar with the convention of sponsored links on Google that the two agencies were somehow aligned.
However, the ACCC chose not to take on (say) STA over this alleged deceptive practice.
Instead, the ACCC took the view that as Google used its AdWords technology to display sponsored links in response to search requests made by users of the Google search engine, it was liable under the Act.
The view was taken notwithstanding the fact that advertisers were the source of the sponsored links, and that Google did not endorse or adopt the contents of any of the sponsored links.
In light of the relevant facts and circumstances, the ACCC contended Google had done more than merely pass on the sponsored links for what they were worth.
The ACCC argued that Google inserted search terms chosen by users of the Google search engine as headlines in the sponsored links, and was therefore responsible for the co-location of the clickable headline containing the name (and, in one case, the URL) of another trader and the advertiser's URL.
How Google won
In its defence, Google argued each relevant aspect of a sponsored link — the headline, the advertising text, the advertiser's URL, the keywords — was specified by the advertiser. Google merely implemented the advertiser's instructions.
Google submitted that its AdWords program, though different in kind, was similar to 'technical facilities' provided to advertisers by other intermediaries such as publishers and broadcasters.
Any commercial association or affiliation between an advertiser and another trader was something peculiarly within the knowledge of the advertiser, and was not a matter within Google's expertise.
Google also relied on the primary Federal Court Justice Nicholas’ findings that ordinary and reasonable users of the Google search engine would have understood that the sponsored links were advertisements paid by advertisers to promote products and businesses, and that Google was merely passing them on for what they were worth.
The High Court gave considerable weight that neither the ACCC nor the full Federal Court contest or led evidence countering the finding that ordinary or reasonable users were unlikely to be misled by the nature of sponsored links.
While the High Court’s decision focused on points of law, its judgment — along with the additional consistent decisions by Justices Hayne and Heydon — disclose a continuing tendency to probe the relevant facts underlying Google’s technology, in response to ACCC allegations.
The ACCC’s claim that Google, rather than its advertisers, was responsible for the alleged breaches of the Act, was rejected as factually incorrect by Justice Hayne.
“It is critical to appreciate that, even with the facility of keyword insertion, the advertiser is the author of the sponsored link. As Google correctly submitted, each relevant aspect of a sponsored link is determined by the advertiser. The automated response which the Google search engine makes to a user's search request by displaying a sponsored link is wholly determined by the keywords and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored links that it publishes or displays.”
In his decision on the case, Justice Heydon observed that the former full Federal Court's reasoning depended heavily on the idea that Google "respond[ed] to the entry of the user's search term".
"But that is implicit in the fact that Google operates a search engine business. Everything on the results page appears there because a user has entered a search query.
"If the Full Court's reasoning leads to the conclusion that a trader in Google's position always 'makes' the representations in the third party advertisements, it is a very extreme conclusion," Heydon wrote.
Did Google assist in the breaches?
The High Court also examined the ACCC’s argument that Google personnel may have assisted advertisers in selecting keywords.
Had Google staff chosen the keywords it may then have put the web giant in breach of the Act; however, according to the High Court judgment, the evidence "never rose so high as to prove that Google personnel, as distinct from the advertisers, had chosen the relevant keywords, or otherwise created, endorsed or adopted the sponsored links."
As the Full Federal Court noted, that finding might be relevant to an allegation that Google was liable as a secondary participant under s 75B of the Act, but no such allegation was made.