The Australian Competition and Consumer Commission (ACCC) have had a win in in The Full Federal Court of Australia which has upheld the ACCCâs appeal against Google for misleading and deceptive conduct relating to Googleâs âsponsored linksâ.
Australian Competition and Consumer Commission v Google Inc [2012] FCAFC 49 (3 April 2012)
Federal Court Decision
In an action by the ACCC against Trading Post Pty Ltd and Google Inc., Nicholas J considered whether use by the Trading Postâs use of its competitorâs names âKloster Fordâ and âCharlestown Toyotaâ as keywords for âSponsored Linksâ on the Google search engine constituted misleading and deceptive conduct under s.52 of the Trade Practices Act 1974. Whilst it was found that Trading Postâs conduct did breach s.52, it was found that there was no breach by Google.
Nicholas J found that the Sponsored Links, which were paid advertisements under Googleâs AdWords program appearing above or to the right of the âorganicâ search results located by Googleâs search algorithms, were sufficiently distinguished from the organic search results. He further found that whilst there was a representation made by Trading Post that the two business names were associated with Trading Post, the representation was not made by Google, which did no more than provide a conduit for the representations made by Trading Post. He found that Google has not âendorsed or adoptedâ the advertiserâs statements. Similarly, several other instances where competitorsâ names were used as keywords by other companies were found not to be representations by Google. The ACCC appealed the decision to the Full Federal Court (Keane CJ, Jacobson J and Lander J).
The Appeal
In the appeal, the ACCC did not press the use of the Kloster Ford and Charlestown Toyota names, but instead concentrated its submissions in relation to four of the other names: âHarvey World Travelâ used as a keyword by STA Travel, âHonda.com.auâ used by CarSales, âAlpha Dog Trainingâ used by The Dog Trainer Pty Ltd (Ausdog) and âJust 4x4s Magazineâ used by Trading Post.
The Court looked at the way the Sponsored Links were presented on the Google search results page. It noted that in each case, the search term keyword appeared in blue, the advertiserâs message in black and the web address in green. Before a particular Sponsored Link was displayed, the entry of a search term into the Google search engine resulted in an âauctionâ in relation to which Sponsored Links to show, what order to show them in, and how much Google charges the advertiser if the link is clicked on by the person conducting the search. The auction was determined partly on the amount to be charged but also upon whether the keywords were chosen as âexact matchâ, âphrase matchâ or âbroad matchâ. The Court also noted that clicking on a Sponsored Link took the user directly to the advertiserâs website.
On this basis the Court found that no user of Googleâs search engine would regard a Sponsored Link presented by Google with a link to the sponsorâs website as a statement by the advertiser that Google is merely passing on. They stated: âWhat appears on Googleâs webpage is Googleâs response to the userâs query. That it happens to headline a keyword chosen by the advertiser does not make it any the less Googleâs response. And even that occurs pursuant to the AdWords facility made available to the advertiser by Google.â Critical to the process of which Sponsored Links were displayed was the triggering of particular links by Google using algorithms applied to its AdWords program. This was a further reason that the Court found that Googleâs conduct was as a principal, not merely as a conduit for the statements made.
The Court found that what a user was being told by Google in response to a search query was that there was a connection between the searched term identifying the competitor and the website of the advertiser. The highlighting of the keyword in large blue font as part of the Sponsored Link suggested that the following advertiserâs message and the link to the advertiserâs webpage are an answer to the userâs query. The conduct was held to be Googleâs because Google was responding to the userâs query and providing the link to the advertiserâs website.
In accordance with the trial judgeâs findings, it was noted that even if an ordinary and reasonable user may not have understood that the representations were made by Google, this was not solely determinative of the issue and would not exclude Google from the scope of s.52. It was also noted that Google could not avail itself of the âpublisherâs defenceâ under s. 85(3), because Google had not fulfilled the onus of showing that it did not have any reason to suspect that the publications were likely to mislead or deceive. In particular, Harvey World Travel (also a client of Googleâs AdWords services) was known to the Google representative creating the STA Travel AdGroup to be one of STA Travelâs competitors, and it was found that a reasonable person would have known that use of a well-known competitorâs name as a keyword triggering an advertisement for STA Travel could lead searchers to wrongly believe that the businesses were associated.
The Court concluded that the trial judge had been in error in failing to find that Google had engaged in misleading and deceptive conduct.
In accordance with the Australian Consumer Law, (which replaced the Trade Practices Act during the course of this case), the Court ordered that Google institute a compliance program in accordance with a proposal set out by the ACCC in a Schedule to the Notice of Appeal. This program requires Google to appoint a Compliance Officer; to conduct a risk assessment of current procedures to identify prospective risks of breaching the Australian Consumer Law; to issue a compliance policy statement; to establish a complaints handling system and training program; to conduct annual independent reviews of the compliance program and to issue reports on these reviews to Google and to the ACCC.
The term âSponsored Linksâ was criticised in the original trial, as it was said to be unclear who the âsponsorâ of the link was. Whether it was due to this criticism or not, it is noted that Google now uses the expression âAds for â. It will be interesting to see what changes are made to nomination of keywords in the Google AdWords program as a result of the appeal decision.