THE consumer watchdog has won a major battle against Google, the Federal Court finding the search giant engaged in false and misleading advertising using search ads.
But legal experts predict Google could look to the High Court in a bid to protect its lucrative advertising stream, worth hundreds of millions of dollars.
The Australian Competition & Consumer Commission successfully appealed a ruling handed down last September in the Federal Court that found Google was not responsible for search engine ads that directed consumers to rivals of the companies they were searching for between 2006 and 2008.
In a blow to its AdWords search engine advertising operation, the full bench overturned the earlier ruling that the advertisers, not Google, had responsibility for the ads and that Google was a mere conduit for the misleading advertising.
"Google is in fact much more than a mere conduit," the court found. "Several features of the overall process indicates that Google engages in misleading conduct."
The ACCC appeal centred on four ads for Harvey World Travel, Honda, Just 4X4 magazine and Alpha Dog Training, whose business names had been bought by rivals in Google's AdWords.
"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," ACCC chairman Rod Sims said.
Richard Hoad, a partner with law firm Clayton Utz, described the ACCC's victory as a significant one.
"The decision places Google in a difficult position," Mr Hoad said. "While it will presumably look to impose further obligations on AdWords customers, based on this decision that may not be sufficient to protect Google from legal action. It can be expected to seek special leave to appeal to the High Court and possibly to agitate for some degree of legislative protection."
In its judgment, the court said Google's AdWords allowed rival advertisers to buy words that returned sponsored results that, when clicked on, took consumers to websites of rival companies.
"The most obvious example of the falsity of the response ad and the fact it is Google's conduit is the Harvey World Travel sponsored link. The user enters that key word because the user is seeking information about Harvey World Travel. Instead the user is given the URL of one of Harvey World Travel's competitors," it said.
In a statement, Google said the court's decision to uphold the appeal was disappointing. "We are disappointed by the Federal Court's decision that Google should be responsible for the content of four particular ads on its platform," a spokesman said.
"Google AdWords is an ads hosting platform, and we believe that advertisers should be responsible for the ads they create on the AdWords platform. We're committed to providing an advertising platform that benefits both advertisers and users. "
Google has been ordered to pay the ACCC's costs relating to the appeal and put in place a compliance process.
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