Automated misleading conduct

Automated misleading conduct

Marketing Brief

Don’t we take our technology for granted? This morning I heard some stunning news with significant consequences – and not just a lawyer would be stunned. The Australian Federal Court has unanimously upheld an appeal by the Australian Competition and Consumer Commission (ACCC – equivalent to our Commerce Commission) that Google had engaged in conduct that was misleading or deceptive, or likely to mislead or deceive. How? By publishing four specific paid ads on the Google Australia website result page. Naturally, I used Google to find out more.

Now, we have all seen the Google paid advertisements. When you enter a search term, Google throws up advertisements which bear some vague relationship to your search query. If you’re like me, you ignore them, acknowledging that the income keeps Google happy and functioning. But I have quietly noticed that some of these raise issues of misleading or deceptive conduct, and these issues were what it was all about.

In its judgement, the Court said between March 2006 and July 2007, Google published search results for queries related to Honda Australia, with results showing paid advertisements for a Honda competitor CarSales. It said the advertisements suggested CarSales was linked to Honda Australia. Several other brands were similarly affected. And that’s what I noticed when I used Google to find the specs of a particular oven I was considering buying. A number of competing brands turned up with their headlines enticing me to look at their websites. Now that wasn’t what I was checking for – it was the equivalent of someone jumping into the middle of the road trying to direct me to a competitor’s store.

The ACCC alleged that the advertisements contained representations that, in summary, indicated that the competitors were affiliated with or sponsored by the business or brand that was the subject of the search. But as the ACCC Chairman said “Google's conduct involved the use by an advertiser of a competitors name as a keyword triggering an advertisement for the advertiser with a matching headline. As the Full Court said this was likely to mislead or deceive a consumer searching for information on the competitor”.

Google of course had claimed that it was a “mere conduit” passing on information provided by the advertisers, and this defence succeeded in the original case. However on appeal the full Federal Court disagreed. Now, this won’t really surprise you. The “mere conduit” defence comes from cases where the person who passed on misleading information made it clear that it was not their information but someone else’s, and they were passing it on for what it was worth.

But the FCA pointed out that Google actually creates the message it presents in response to a search query: "here 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 New Zealand equivalent of the relevant Australian provision is section 9 of the Fair Trading Act. Here's the interesting part – this is not a criminal provision. It enables aggrieved competitors to sue for damages. So if you’re advertising online through Google and you’ve used a competitor’s name as a keyword… watch out. They’ll be on to you, and it could be expensive.

Rae Nield is a solicitor specialising in marketing law. This article is intended for general information, and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at

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