news Google has won a lawsuit in which Australia’s national competition regulator had alleged the search giant wasn’t adequately distinguishing paid advertisements displayed by its search engine from ordinary ‘organic’ search results.
The Australian Competition and Consumer Commission filed the case in July 2007 in the Federal Court, alleging that Google had breached the Trade Practices Act by allowing advertisements placed by the Trading Post about car retailers in Newcastle to appear alongside results displayed by its search engine.
Among the outcomes the ACCC sought at the time were injunctions which would have restrained Google from publishing sponsored links representing organisations which did not exist — such as the Trading Post’s move to place advertisements for “Kloster Ford” and “Charlestown Toyota”, which were the names of car retailers in Newcastle. The regulator had stated at the time that it believed its action was the first of its type globally.
However, in a statement today regarding the outcome of the case today, the ACCC acknowledged a ruling by sitting Justice Nicholas that most people using Google’s search engine would have understood that the label “sponsored links” meant the offending links were advertisements. The Court did find that Trading Post, which had been responsible for the advertisements, had engaged in misleading conduct in doing so — but Google had not, as it had merely displayed the infinging ads without endorsing them.
Since the case was commenced, Google has taken a number of steps to rectify any misconception about its ads — such as changing the labelling of sponsored links to ‘Ads’ and releasing a new policy on the use of unrelated business names in the first line of text for advertisements. That policy was initially applied by Google in Australia and New Zealand, but then expanded in July 2010 globally.
“This case is important in relation to clarifying advertising practices in the internet age,” ACCC Chairman Rod Sims said in the regulator’s statement. “All businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers.” Nicholas reportedly ordered Trading Post to pay $28,000 of the ACCC’s court costs — but the ACCC has been ordered to pay Google’s costs.
Sounds like a victory for common sense. Most people these days understand that Google has normal links and paid advertisements in its search results — and they’re pretty clearly delineated. But what the Trading Post was doing appeared to be quite out of line.