Peter Le Guay

Just the messenger – Google’s sponsored links not misleading or deceptive

Peter Le Guay

7 February 2013

IT New Media

The High Court has unanimously upheld an appeal by Google Inc (Google) from last year’s decision of the Full Federal Court in favour of the Australian Competition and Consumer Commission (ACCC), holding that Google had not engaged in “misleading or deceptive conduct” in contravention of the old section 52 of the Trade Practices Act 1974 (TPA) (now section 18 of the Australian Consumer Law (ACL)). The appeal effectively reinstates the decision of the primary judge that Google’s conduct was not misleading or deceptive.


The case centred on Google’s use of “sponsored links” which appear in shaded boxes above and to the left or right of the “organic search results” (ordinary search results).  The organic search results are provided free of charge, and are organised based on relevance to the user’s search query utilising a complex proprietary algorithm developed by Google. The sponsored links location and content is determined through an advertiser’s use of the Google-developed AdWords program. The program gives advertisers the ability to specify which keywords will trigger the display of the sponsored link, and gives the advertiser the ability to add the keywords into a clickable headline in the sponsored link (called keyword insertion). Each of the sponsored links that were the subject of the appeal involved the advertiser inserting keywords relevant to a competitor (or other unassociated company), and having the keyword insertion function activated. The end result was a sponsored link with a headline containing keywords relating to a competitor or other unassociated company with a link to the advertiser’s website (the advertisements). The advertisements were found to be misleading or deceptive by the primary judge as far as the advertisers were concerned and that finding was not disturbed on appeal, either to the Full Federal Court or the High Court.  The question for the High Court was whether Google’s conduct was such that they were also primarily liable for the misrepresentations made by the advertisements1.


The ACCC argued that by publishing and displaying the advertisements, Google had contravened the TPA in its own right and did not “merely pass on the sponsored links for what they were worth”2. In particular, the ACCC maintained that Google was the maker or creator of the advertisements by virtue of the technology it used to display the sponsored links in response to a user’s request, despite the fact that the advertisers, and not Google, were the source of the sponsored links. Essential to the ACCC’s argument was the role of the keyword insertion facility and that Google had inserted the search terms used by Google search engine users as headlines in the sponsored links and that by virtue of this Google was “responsible for the collocation of the clickable headline containing the name … of another trader and the advertiser’s URL”3.  In addition, the ACCC pointed out that Google provided the ‘clickable headline’ which would direct the user to the advertiser’s website.


In response, whilst Google did not shy away from the proposition that it published or displayed the advertisements (indeed, Google admitted that it did), it argued that each aspect of the sponsored links (including the use of keyword insertion) was specified by the advertisers, not Google. As far as Google was concerned they were carrying out their advertiser clients’ instructions and were “merely passing them [the sponsored links] on for what they were worth”4. In this respect Google likened themselves to other intermediaries that provided similar facilities, in principle, to their advertiser clients such as newspaper publishers and broadcasters. Google also relied on the primary judge’s finding that ordinary and reasonable users of Google’s search engine would understand that the sponsored links were paid advertisements by the advertisers.


The Court rejected the ACCC’s argument that Google produced the advertisements, as opposed to merely passing on the sponsored links for what they were worth. The majority of the Court found that:


“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.”5


The majority accepted Google’s analogy with newspaper publishers and broadcasters and also found that ordinary and reasonable users of Google’s search engine would understand that the sponsored links were created by advertisers, and were not adopted nor endorsed by Google.


Given the Court’s findings, it was not necessary for it to consider the statutory defence available to publishers who publish or arrange for the publication of advertisements in the ordinary course of business under section 85(3) of the TPA (now section 209 of the ACL). As was the case in this appeal, Google’s conduct did not amount to an endorsement or adoption of a published representation. However, the Court commented on the circumstances where an intermediary publisher has in fact endorsed or adopted a published representation of an advertiser in which case the “publisher may need to show that it had some appropriate system in place to succeed in the defence that it did not know and had no reason to suspect that the publication of that representation would amount to a contravention.”6


The case is a huge win for social media providers and search engine operators and a salutary lesson for any intermediary publisher, whether print or online as to the applicable legal principles when publishing, or arranging the publication of, a third party’s material. The decision highlights the Court’s in depth understanding of consumer behaviour to search engine technologies and also emphasises the point that allegations of misleading or deceptive conduct are very fact specific and findings of a misrepresentation, and subsequent liability for that misrepresentation, are very much reliant on the facts of each individual case.


1 The ACCC did not take any action against Google under the aiding and abetting provisions of section 75B of the TPA (now section 75B of the Competition and Consumer Act 2010), so it remains to be seen whether that provision could have applied to the circumstances of this case.

2 Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 (6 February 2013) at paragraph 63

3 Ibid at paragraph 64

4 Ibid at paragraph 66

5 Ibid at paragraph 68

6 Ibid at paragraph 75