ACCC v Google Inc: Federal Court finds Google breached Trade Practices Act

In the case of ACCC v Google Inc [2012] FCAFC 49, the Full Federal Court ruled last week that search company Google has broken the law by publishing misleading or deceptive advertisements, in breach of Section 52 of the Trade Practices Act 1974. The advertisements were found to be falsely representing a connection between Google’s customers and competing businesses.

The service in question, Google’s “AdWords,” allowed businesses to use a competitors’ names as keywords. When users searched for the keywords, results would appear linking the competitor’s name to the advertiser’s website.

The case was initially dismissed in the Federal Court, with the judge noting that while some of the advertisements could be said to be misleading or deceptive, Google had merely communicated the representations made by the advertisers, and had not made those representations itself. It was determined that ordinary and reasonable users of the search engine would have understood the message being conveyed as one from the advertiser, rather than from Google as the publisher.

However, on appeal, this decision was overturned. The Full Court reasoned that the question of whether a corporation had itself engaged in misleading or deceptive conduct, or had merely acted as a conduit for another, is a question of fact, and the facts in this case showed that Google had engaged in such conduct. The Court noted that “What appears on Google’s webpage is Google’s response to the user’s query… Google’s conduct cannot fairly be described as merely passing on the statements of the advertiser for what they are worth. In those circumstances, it is an error to conclude that Google has not engaged in the conduct of publishing the sponsored links because it has not adopted or endorsed the message conveyed by its response to the user’s query."

In its orders, the Full Court directed Google to implement a trade practices compliance program, and to pay the ACCC’s costs of the appeal.

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