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    "Palazzo Ducale - it's an Italian restaurant in an elite palace, an ornate mansion, with an old rococo-style interior. It's one of my favourite areas on the Bulvar, the 19th century boulevard around the heart of old Moscow. The clientele is a combination of connected plutocrats, their hangers-on, families, and their girlfriends, who are stunning Russian models. There are always big black Mercedes and Bentleys parked outside. Once I was asked to chose the wine and was told by my host that the one I chose was not expensive enough. He sent it back."  

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    « A painful day | Main | Whales get their day in court »

    Messenger remains unshot by the High Court

    Google v ACCC ... Advertisements are advertisements and Google's AdWords isn't responsible if they are misleading ... Challenge to make search engines more accountable, without destroying their openness and convenience ... Stephen Keim and Jordan Sosnowski examine the case and the policy issues  

    LONG gone are the days when, if you wanted to know more about a particular subject, you went to the library.

    Now it's as simple as typing a few words into a search engine, usually Google, and there pops-up your answer.

    Or, to be more precise, at least half-a-million or so potential answers.

    Our finely attuned internet savvy brains wade through these answers in milliseconds, deciding which link will yield what we want. Then, click.

    It is precisely this type of behaviour which recently gave cause for the Australian Competition and Consumer Commission to take action against Google in the Federal Court of Australia.

    The ACCC alleged that particular advertisements were misleading and that Google was in breach of s.52 of the Trade Practices Act for causing these advertisements to be published or displayed.

    The Federal Court case was dismissed, primarily, because Justice John Nicholas found that it was the advertisers, not Google, that had actually engaged in the misleading or deceptive conduct.

    The ACCC then appealed to the Full Court of the Federal Court and the appeal was unanimously allowed.

    The Full Court found that when a sponsored link crops up in relation to a user's search query, it misrepresents the existence of a commercial relationship between the search enquiry and the advertised link.

    Google was responsible for generating the response to the enquiry. Therefore, Google engaged in misleading conduct for the purposes of s.52.

    Round three: Google appealed to the High Court who unanimously overturned the Full Court's decision.

    The upshot of the recently released judgment is that Google is not responsible for the content of its advertisements, they are but mere "messengers". 


    Google is a free search engine that makes the bulk of its revenue from advertising or "sponsored links".

    These particular links display at the top of the page in a different colour to the "organic" links.

    The organic links are generated via a complex algorithm based on relevance to the search query.

    When advertisers pay for sponsored links, they can enter the types of queries they wish to "trigger" their advertisement. This function is available to advertisers by means of the Google owned AdWords program.

    One example from the case is that STA Travel wanted to advertise on Google.

    Very naughtily, it included "Harvey World Travel" as one of their trigger phrases.

    So, when Google users searched for "Harvey World Travel", an advertisement for STA travel would pop-up on the page. The displayed result implied that the two companies were commercially affiliated when, in reality, they are competitors. 

    Justice Nicholas found that STA had misleadingly represented that information about Harvey World Travel could be found on the STA website.

    The issue in question for the High Court was whether Google, by publishing or displaying these links that provided the vehicle for STA and other companies' misleading conduct, was also in breach of s.52.

    Prior case law

    Yorke v Lucas was a case involving the sale of a business.

    The restaurant owner misrepresented the turnover and profit of the business to their agent.

    The agent then passed on this information to the prospective purchasers.

    The companies of both the restaurant owner and the agent were found to have contravened s.52.

    However, the director of the agent company got off the hook, as it was shown that he had been conscientious and had more than once checked his instructions.

    Even though the corporations in this case were found liable, the court nevertheless stated: 

    "If the circumstances are such as to make apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive."  

    In Butcher v Lachlan Elder Realty Ltd, a real estate agent provided a prospective purchaser with a brochure, which consisted of a survey diagram that was incorrect.

    The brochure itself contained a disclaimer stating that the accuracy of the information could not be guaranteed.

    In this case, the majority found that "the agent did not purport to do anything more than pass on information supplied by others". 


    The ACCC put forward the contention that Google did more than just pass on the information to users.

    The commission argued that Google was the "maker or creator of the sponsored links" and, therefore, had engaged in misleading or deceptive conduct as a principal.

    The ACCC accepted that the advertisers were the ones who chose the key words and selected them for the purpose of having their advertisements crop-up whenever those search words were entered.

    However, the ACCC contended that it was Google who made available the functionality of the representation, being the blue headline that could be clicked by users.

    The Full Court agreed with this reasoning and found that Google 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." 


    Google admitted that it published or displayed the advertisements in question.

    However, it argued that simply displaying the links was not enough to justify a finding that it had made the misleading representations.

    Google's main contention was that the sponsored link, including the headline, the advertising text, the advertiser's URL, and the keywords, were all specified by the advertiser.

    By displaying the links, Google was merely implementing the advertiser's instructions.

    Similarly, Google relied on the contention that ordinary and reasonable users of the search engine would have understood that the sponsored links were advertisements and that Google was just passing them on for what they were worth.

    The High Court's decision

    While the High Court stated it was possible that the conduct of publishing an advertisement made and paid for by a third party could contravene s.52, it did not find that Google had done so.

    The court agreed with Google's submissions and found that the appellant did not, in any authorial sense, create the sponsored links and that the advertisers created those links.

    The court described Google's response to the user's search query as "automated" and wholly determined by the advertiser's choice of keywords.

    The court accepted that the ordinary users of the search engine would have gauged that the advertisements were not endorsed or created by Google. 

    Justice Kenneth Hayne said:

    "The ACCC had failed to make good the central allegation upon which its case ... depended: that Google made the representations conveyed by the advertisements."

    His Honour referred to both Yorke and Butcher, and stated that the fact of electronic publication did not mean that different principles were applicable.

    Justice Heydon found that the ACCC's argument, that Google had made misrepresentations in the sponsored links because the link's content was responsive to the user's query through the AdWords program, was "an unacceptably extreme submission". 


    The main argument against the ACCC's case was that most people using the search engine would have known that the advertisements were, just that, advertisements.

    Because the sponsored links were advertisements, users would also know that they were not put there by or endorsed by Google, but were simply displayed because the advertisers had paid Google for that privilege. 

    The High Court's conclusion seems a technically correct and a practically sensible answer to the legal questions raised.

    Yet, in this talk of links, it is important to keep in mind the important social fact that Google earns huge revenues from AdWords.

    What level of social responsibility should go with those benefits? In terms of scale and ease of access, Google is very different to print media publishers. 

    It was the desire to bring social accountability to such a behemoth that caused the ACCC to pursue its argument through the judicial hierarchy. 

    If Google was made accountable as intended, its modus operandi as explained in the case would have to be changed.

    The licence to print money that its search engine provides may have been imprinted with inconvenient qualifications.

    But Google is more than a glorified mailman.

    The task for policy maker and legislators, if not presently for the courts, is to find a way to make search engines more accountable, without destroying the convenience of the services they provide. 

    Stephen Keim & Jordan Sosnowski 

    High Court: Google v ACCC 
    Full Federal Court: ACCC v Google 
    Federal Court: ACCC v Trading Post 

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