ACCC wins appeal against Google

The Full Federal Court today unanimously upheld the Australian Competition and Consumer Commission’s appeal in the matter of Australian Competition and Consumer Commission v Google Inc [2012] FCAFC 49.

In this decision the Full Court found that Google had published advertisements on the results pages of their Australian website that were misleading and deceptive, or likely to mislead or deceive, in breach of Section 52 of the Trade Practices Act 1974.

The Full Court also ordered Google to put into place a consumer law compliance programme.

Background

When the matter was first brought to the court, the ACCC alleged that Google had engaged in misleading or deceptive conduct in relation to a number of advertisements on Google’s search results page. The advertisements that were being complained about contained product names, business names, or details that were not associated with the advertiser – for example, a user would click on a advertisement for “Gucci” bags but were instead led to a competitor’s website instead. Essentially, those businesses bought the use of their competitor’s keywords.

The first judge to hear the case thought that Google had not made those representations and Google merely communicated representations made by the advertiser. Justice Nicholas ruled that Google did not breach the Trade Practices Act.

The ACCC appealed the primary judge’s decision in relation to four of the eleven advertisements pleaded at first instance.

The central issue for determination on appeal was whether the primary judge made a mistake in finding that Google did not “make” the representations contained in the four advertisements the subject of the appeal. On appeal, the ACCC was successful and the decision of the lower court was reversed.

The Full Court considered:

“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.”

While this is a cautionary tale for advertisers, we consider that this ruling primarily affect search engines or other electronic advertisers who tailor make their advertising to suit match their user’s search enquiries. It goes without saying that you should never use your competitor’s advertising or branding. The ACCC will catch on – and it’s likely that Google will be a lot more stringent in checking if your SEO strategy is legitimate.