ACCC wins appeal over misleading and deceptive Google AdWords campaigns

Google says the company is considering its options after the Federal Court upheld an appeal by the competition watchdog over ads shown on the search engine that were found to be misleading and deceptive.

The finding, which comes after months of complicated debate, could have wide-reaching ramifications for the SEO industry and online ads in general, a sector Google controls overwhelmingly.

The Federal Court found Google engaged in misleading and deceptive conduct by showing ads despite the actual headline of those ads referring to a competitor. This occurred because some companies, including Honda and Harvey World Travel, had their keywords bought by rival businesses.

This meant that even 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 them to the Honda website, but to the Trading Post website instead.

ACCC chairman Rod Sims told SmartCompany this morning 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.”

However, Sims refused to speculate on whether Google would take its case to the High Court. 

Google attempted to argue that it was not necessarily responsible for the errors, but the Federal Court has said 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 found it is Google’s response which is misleading, even though the key words are selected by the advertiser. “What is critical to the process is the triggering of the link by Google using its algorithms.”

Google points out the ruling doesn’t overturn the initial Federal Court decision that differentiates between “organic” search results and advertising, but says it is still disappointed by the latest result.

“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.”

Yesterday’s decision follows a complicated legal process.

Five years ago, the ACCC alleged Google had engaged in misleading or deceptive conduct by publishing the initial advertisements, and the primary judge found that although the ads were misleading or deceptive, Google wasn’t actually responsible.

The ACCC then appealed in relation to four of the eleven initial advertisements cited in the original case. The issue was whether the primary judge erred in deciding Google did not “make” the representations.

The Full Court has ordered Google to introduce a consumer law compliance program and pay the ACCC’s appeal costs.

ACCC chairman Rod Sims warned Google’s conduct involved the use of a competitor’s name as a keyword and was therefore likely to deceive a consumer. The decision is a clear warning for the thousands of small businesses using Google as an advertising platform.

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

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