Google vs the ACCC

GoogleAdWordsNow that the dust has settled on the High Court’s judgment in Google Inc v Australian Competition and Consumer Commission [2013] HCA 1, let’s have a chat.

So, was this a loss for consumer protection or a win for common sense? Or perhaps a little bit of both?

What happened?

When you search on Google, you get two types of results:

    1. at the top of the page, in a shaded box, titled ‘sponsored links’ at the time, you receive search results paid for by businesses, which are returned on the basis of ‘AdWords’ that advertisers associate with their offerings; and
    2. underneath, you receive general search results ordered based on relevance as determined by Google’s proprietary algorithm.

The ACCC took issue with the first category of paid search results, which are in effect a form of targeted advertising. During 2006 and 2007 a number of advertisers chose to take advantage of the manner in which ‘AdWords’ operated, by choosing as ‘AdWords’ keywords that were associated with their competitors. This resulted in their links being displayed in the paid search results section in response to search terms associated with their competitors. The ACCC considered this misleading or deceptive conduct.

Interestingly, the ACCC chose to pursue Google, in its capacity as the publisher, rather than the advertisers who were responsible for selecting and then submitting the ‘AdWords’ in question to Google.

Google of course argued that it was a mere intermediary, or conduit, which passed on the information prepared by advertisers to search users and, that if anyone was at fault, it was the advertisers who chose the keywords which triggered the misleading results.

At first instance, the Federal Court of Australia found that the conduct was in fact misleading and deceptive, but those representation had not been made by Google. The Court noted that ordinary consumers would have understood the nature of those paid search results and the fact that Google has not endorsed them nor have been responsible in any meaningful way for the content in question.

The ACCC appealed to the Full Court of the Federal Court of Australia. The Full Court overturned the first instance decision and held that Google had itself engaged in misleading and deceptive conduct by publishing and displaying the paid search results.

It was Google’s turn to appeal and thus the matter landed in the High Court of Australia.

The High Court judgment

The High Court was unequivocal in upholding Google’s appeal and held that Google did not engage in misleading or deceptive conduct. It found that Google did not create the links that it published or displayed under its paid searches and that a reasonable user of Google search would have understood that any representations conveyed by the paid search results were made by the relevant advertisers, not Google.

So, a loss for consumers or a win for common sense?!

I would have expected to find myself on the ‘loss for consumers’ side, as I am a strong advocate of legislative protections for consumers generally. However, in this instance I believe that the High Court got it absolutely right.

Consumer protection is always a fine balancing act. On the one hand you want to make sure that consumers are not injured by products or duped by shonky operators; on the other hand you need to be careful not to place entirely unreasonable (or unworkable) expectations on businesses.

While it is entirely appropriate to have reasonable protections in place for consumer, such protections need not always assume that consumer are complete mushrooms (don’t look that term up in a legal dictionary)!

The High Court’s view that a ‘reasonable’, ordinary user of Google would be aware of the fact that any representations made by paid search results that were returned, highlighted as ‘sponsored links’, were in fact made by the relevant advertisers, is an entirely reasonable, if not the only appropriate, view in the circumstances. I am of the firm view that consumers would clearly understand that Google has no more involvement in the content of such links than it does in other search results popping up on the page (other than accepting payment for displaying them in accordance with certain search terms).

After all, that’s exactly what a search engine does and that’s just … common sense, or as The Australian’s headline put it: ‘ACCC gets a lesson in practicality‘.

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