April 3, 2012
Google Slapped With Guilty Verdict For Misleading Ads
Google Inc. on Tuesday was found guilty in an Australian court for “deceptive” conduct by allowing misleading advertisements to be shown in Internet search results on its pages, after an appeal was upheld by the country´s competition regulator.
Google initially won a case brought by the Australian Competition and Consumer Commission (ACCC) last September over claims that its sponsored links within search results were misleading. But that ruling was overturned by three Federal Court judges following the appeal.
The lower court ruled in September that Google was not responsible for advertisers´ breaches of Australia´s Trade Practices Act. But the Federal Court disagreed. It ruled that Google had engaged in the misleading conduct with four ads that appeared on its Google Australia website. The deceptive ads used the names of competitors as keywords to trigger their own ads appearing.
The court ruled that these ads were likely to mislead people searching for information about those competitors. Google´s AdWords system posts small text ads next to search results based on search keywords selected by advertisers.
The court said that a guilty verdict does not impose a fine. But it does mean that Google must make changes to prevent future breaches. It will also be required to pay all court costs to the ACCC.
Google said it was disappointed by the decision and is considering its options, which includes a High Court appeal.
In a statement, Google said it should not be responsible for how its AdWords system is used by advertisers, and that “advertisers should be responsible for the ads they create on the AdWords platform.”
The misleading adverts used keywords for Honda, Harvey World Travel, Alpha Dog Training and Just 4x4 Magazine. The Federal Court said that because it was Google´s technology that created the ads displayed, it is responsible.
“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 court said.
“The ACCC brought this appeal because it raises very important issues as to the role of search engine providers as publishers of paid content in the online age,” said ACCC chairman Rod Sims in a statement. “This is an important outcome because it makes it clear that Google and other search engine providers which use similar technology to Google will be directly accountable for misleading or deceptive paid search results.”
The Federal Court in its ruling also ordered Google to set up a compliance program to ensure paid advertisements on its search engine did not mislead consumers.