Misleading ads: ACCC wins appeal against Google

news The Full Federal Court of Australia has ruled that Google breached the law by displaying misleading or deceptive advertisements on its search results pages. The decision follows an appeal by the Australian Competition and Consumer Commission (ACCC), following an earlier decision in favour of Google.

The ACCC had first filed the case in July 2007 in the Federal Court alleging that Google had engaged in misleading or deceptive conduct by publishing eleven advertisements on Google’s search results page. The headline of each of the advertisements in question comprised a business name, product name or web address of a competitor’s business not sponsored, affiliated or associated with the particular advertiser. When a user clicked the headline of the advertisement, he or she was taken to the advertiser’s website.

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”, both of which were names of car retailers in Newcastle.

Sitting Justice Antony Nicholas had last September ruled that most people who used Google’s search engine would have understood that the term “sponsored links” meant the offending links were advertisements. However, the ACCC appealed the case in October 2011, alleging that the judgement may not have taken into account the difference between print and online media; and arguing that it may get a different judgement from the full bench of the Federal Court.

“It is significant that the previous Federal Court decisions considered by Justice Nicholas related to publishers of advertisements in traditional forms of media, such as print and television. The reasoning in those cases is not easily translated to the practices of search engine providers such as Google in publishing sponsored entries as part of search results,” the regulator said in a statement after filing the appeal last September.

“Google’s conduct involved the use by an advertiser of a competitor’s name as a keyword triggering an advertisement for the advertiser with a matching headline. As the Full Court said this was likely to mislead or deceive a consumer searching for information on the competitor,” ACCC chairman Rod Sims said in a statement. “The ACCC brought this appeal because it raises very important issues as to the role of search engine providers as publishers of paid content in the online age.”

“This is an important outcome because it makes it clear that Google and other search engine providers which use similar technology to Google will be directly accountable for misleading or deceptive paid search results,” Sims added.

In upholding the ACCC’s appeal, the Full Court concluded that “here Google created the message which it presents. Google’s search engine calls up and displays the response to the user’s query. It is Google’s technology which creates that which is displayed. Google did not merely repeat or pass on a statement by the advertiser: what is displayed in response to the user’s search query is not the equivalent of Google saying here is a statement by an advertiser which is passed on for what it is worth.”

The Full Court also ordered Google to put in place a consumer law compliance programme and pay the ACCC’s costs of the appeal.

When the ACCC initially lost its case against Google, I wrote that the judgement sounded like a victory for common sense, given that most people these days understand that Google has normal links and paid advertisements in its search results, and that they are pretty clearly delineated. Consequently, I believed the ACCC was barking up the wrong tree in its appeal — and may even not quite understand the nature of the Internet publishing platform it’s dealing with here.

I still believe the ACCC has far, far better things to spend its time on than targeting Google’s advertising functionality, a service which I have heard few (if any) people complain about over the past decade or so that it’s been available. However, this week’s judgement of the full Federal Court does legitimise the ACCC’s actions. Perhaps Google does have to answer further for its actions. It will be interesting to see what impact the new rules will have on the search giant’s behaviour.

Opinion/analysis by Renai LeMay


  1. The particular search that served the ads might be determined by Google but the content of the Ad is in the hands of and subject to the approval of the advertiser.

    Now if the Ad appeared in the news paper would the ACCC go after the paper or the advertiser?

    • Having said the above Google doesn’t allow you to advertise on registered trademarks you don’t own.

    • I was just wondering if TV networks would find themselves in similar territory to Google if a third party ran misleading ads on their platform.

  2. @SMEMatt:

    Google disallows it because it got tried — and lost — in Europe back when they allowed precisely that. They lost for mostly similar reasons as they did here, too: it’s misleading.


    I found his analogies far from compelling. And they come with little to no arguments.

    A better analogy might have been a billboard. It reads: “Burger King next right!” You turn 50m later. Dead-end. Facing you, a shoddy-looking taco place. Should the billboard company have be held liable for posting this misleading ad?

    In the initial ruling, the answer seems to be: sue the burger place. The billboard is a mere venue. (This is a weird position, btw. In more than a few countries, laws hold a publisher liable for anything it prints — including billboard ads and blog comment posts.)

    In the new one, it seems to be: sue the billboard company. Its intent, and its viewer’s intent, make it more than a simple venue. Continuing the analogy, it’s one thing to rent static billboard space. It’s another to be the goto place for a directions, to be asked for “Burger King”, and to mislead whoever asks to whichever shoddy taco place that gave you the highest kickback. Or so it seems, anyway…

  3. Just a note about why Google was being sued: Google’s staff (“creative maximisers”) were in some cases actually suggesting the offending keywords to the companies in question, but more importantly, what was impugned was the way Google was advertising, not so much the content that it advertised. That is to say, it wasn’t being sued as a publisher, or in the way you may imagine a billboard company being sued for the ads it hosts.

    If you read the case, you’ll see that the ACCC *aren’t* idiots because they argue that ads can mislead and deceive. One thing they argued was that the way the ads are displayed is capable of being misleading and deceiving – which is distinct from the claim that they were deceived or misled by the ads themselves. Their argument flows from the idea that just because people like you and I are internet savvy, it does not mean that *everyone* is internet savvy – some of our parents, for example, may not be the most web-literate people. The legislation is not there to protect a wider class of people than just us, who may have figured out that sponsored links were ads. I will admit I think they could have used better claims than they did. I would have argued that sponsored links do not point out who is sponsoring whom, and the fact that most people even now can’t distinguish between right hand column ads and ads appearing above the organic results, the fact that even in 2008, around 60% of internet users surveyed in the US couldn’t distinguish between organic results and ads and so on.

    It’s an interesting case, but because of the tricksiness of its facts, it is prone to being misconstrued when discussed in a public forum.

    Regarding SMEMatt’s comment that Google doesn’t allow you to advertise using trademarks you don’t own – it’s worth noting this is a reactive measure. It works on a reporting basis – so I could use your trademarked word as an adwords keyword until such time as you found out about it and provided evidence to Google. Then I would be stopped from using it, but you’d have to sue me if you wanted anything punitive to come out of it.

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