Google tipped to appeal to High Court against Adwords decision

Google is likely to launch a High Court challenge to a Federal Court finding that it engaged in false and misleading advertising.

Google initially said it was considering its options after the Federal Court upheld an appeal by the Australian Competition and Consumer Commission (ACCC) over ads shown on the search engine.

Richard Hoad, partner at law firm Clayton Utz, told SmartCompany that an appeal to the High Court is likely, although Google will need to seek leave for an appeal as there is no automatic right of appeal.  

“In my view, Google is likely to try to appeal,” says Hoad.

“If it stands, the decision last week will make life difficult for Google as it strikes at the very heart of its business model.

“Sponsored links are the rivers of gold for online search companies.”

The Federal Court found Google engaged in misleading and deceptive conduct by showing ads despite the headline of those ads referring to a competitor.

That occurred because keywords for some companies, including Honda, Alpha Dog Training, Just 4X4 Magazine and Harvey World Travel, were bought by rival businesses.

Purchasing the keywords meant that if a user searched for “Honda” and an advertisement at the top of the page had “Honda” in the headline, it would not necessarily take the user to the Honda website, but to the Trading Post website instead.

Following the Federal Court decision ACCC chairman Rod Sims told SmartCompany he believed the case would have wide ramifications for search engine operators.

“Online agencies need to think about what their algorithms and technologies facilitate,” he said.

“Google actually had staff helping the advertisers take full advantage of its system.

“The main thing the Court found here was that it was involved in the process.”

In a statement following Google’s loss to the ACCC the search engine said: “We are disappointed by the Federal Court’s decision that Google should be responsible for the content of four particular ads on its platform.

“Google AdWords is an ads hosting platform and we believe that advertisers should be responsible for the ads they create on the AdWords platform.”

Concerned about the broader implications for search engines, Google may seek the support of rivals Microsoft, which operates the Bing search engine, and Yahoo to challenge the ruling.

Business writer and blogger Paul Wallbank told SmartCompany that if Google does not appeal there are implications for online publishers because they may be responsible for the conduct of advertisers.

“The case is really important because if the ACCC win it’s going to put a great burden on all online ad networks as it will make them liable for the actions of their advertisers,” says Wallbank.

“We shouldn’t forget that a Telstra business unit started this by acting illegally – and which they were successfully prosecuted for – which illustrates the importance of considering real world laws and ethics before engaging in a digital marketing strategy.”

The ACCC and Google were unavailable for comment.

Here are three reasons it is inevitable that Google will appeal the decision in the High Court:

  • The decision is contrary to Google’s terms of use, which makes advertisers responsible for the ads they create on the AdWords platform.
  • If the decision stands Google and other search engine providers which use similar technology to Google could be held directly accountable for misleading or deceptive paid search results.
  • This would have global implications for Google’s search advertising market, which is worth tens of billions of dollars.

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