Australian High Court says that Google Adwords is neutral

A couple of days ago the High Court of Australia unanimously allowed an appeal from a decision of the Full Court of the Federal Court of Australia in which it was found that Google had engaged in misleading or deceptive conduct contrary to Section 52 of the Trade Practices Act 1974 by displaying certain internet search results. This provision reads as follows:

52. (1) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive. 

(2) Nothing in the succeeding provisions of this Division shall be taken as limiting by implication the generality of sub-section (1).

As explained in the press release issued by the High Court, Google search engine displayed [according to the survey conducted by Merpel, it still does] two types of search results in response to a user’s search request: “organic search results” and “sponsored links”. While the first ones were links to webpages that were ranked in order of relevance to the search terms entered by the user, a sponsored link was a form of advertisement. Each sponsored link was created by, or at the direction of, an advertiser, who paid Google to display advertising text which directed users to a website of the advertiser’s choosing.

Merpel understood it as
"organic bread result"

The Australian Competition and Consumer Commission (ACCC) claimed that particular sponsored links displayed by Google search engine between 2005 and 2008 had conveyed misleading and deceptive representations. By publishing or displaying those search results, Google was said to have contravened Section 52. As reported by Bloomberg, this case was the first claim of its kind in the world that sought to make the search-engine company responsible for the content of ads.

At first instance, the primary judge found that although the impugned representations were misleading and deceptive, those representations had not been made by Google. Ordinary and reasonable members of the relevant class of consumers who might be affected by the alleged conduct would have understood that sponsored links were advertisements and would have not have understood Google to have endorsed or to have been responsible in any meaningful way for the content of those advertisements.

Being unhappy with the outcome, the ACCC successfully appealed to the Full Court of the Federal Court, which unanimously held that Google itself had engaged in misleading or deceptive conduct by publishing and displaying the sponsored links. 

By special leave, Google appealed to the High Court, which allowed the appeal and - almost six years after the ACCC first sued Google - held that Mountain View internet giant had not created the sponsored links that it published or displayed. Ordinary and reasonable users of Google search engine would have understood that the representation conveyed by the sponsored links were those of the advertisers and would have not concluded that Google adopted or endorsed the representations, 

According to French CJ, Creman J and Kiefel J,

"even with the facility of keyword insertion, the advertiser is the author of the sponsored link. As Google correctly submitted, each relevant aspect of a sponsored link is determined by the advertiser. The automated response which the Google search engine makes to a user’s search request by displaying a sponsored link is wholly determined by the keywords and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored links that it publishes or displays.

That the display of sponsored links (together with organic search results) can be described as Google’s response to a user’s request for information does not render Google the maker, author, creator or originator of the information in a sponsored link. The technology which lies behind the display of a sponsored link merely assembles information provided by others for the purpose of displaying advertisements directed to users of the Google search engine in their capacity as consumers of products and services. In this sense, Google is not relevantly different from other intermediaries, such as newspaper publishers (whether in print or online) or broadcasters (whether radio, television or online), who publish, display or broadcast the advertisements of others. The fact that the provision of information via the internet will – because of the nature of the internet – necessarily involve a response to a request made by an internet user does not, without more, disturb the analogy between Google and other intermediaries. To the extent that it displays sponsored links, the Google search engine is only a means of communication between advertisers and consumers ...

Taken together, the facts and circumstances considered above show that Google did not itself engage in misleading or deceptive conduct, or endorse or adopt the representations which it displayed on behalf of advertisers.”

Appalled just at the idea that some sponsored
links might be misleading or deceptive

“This is a benchmark case in both Australia and internationally in respect to online advertising practices and the responsibility of website hosts for third-party content” said Google's attorneys.

Indeed, Merpel finds the decision quite fascinating, as it somehow marks a departure from what is currently the understanding of ISP liability under EU law.

Not a long time has in fact passed since the decision in Joined Cases C-236/08 and C-238/08 Google and Google France, in which the Court of Justice of the European Union (CJEU) provided, among other things, its interpretation of Article 14 of the Ecommerce Directive. 

As explained by the CJEU, Article 14 must be interpreted as meaning that the rule laid down therein applies to an internet referencing service provider in the case where that service provider has not played an active role of such a kind as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned. 

Accordingly, in order to establish whether the liability of a referencing service provider may be limited under Article 14 it is necessary to examine whether the role played by that service provider is neutral, in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores.

Contrary to the conclusion achieved by the Australian court, the CJEU did not rule out the possibility that Google could not be considered as playing merely a neutral role, as this processed the data entered by advertisers and the resulting display of the ads was made under conditions which Google controlled. As a result, Google determined the order of display according to, inter alia, the remuneration paid by the advertisers.