ACCC v Google [2012] FCAFC 49 - the appeal to the Full Court (FCA)

The matter of Australian Competition and Consumer Commission v Google Inc [2012] FCAFC 49 was an appeal from the decision of Nicholas J. I gave a summary and analysis of the decision of Nicholas J in my previous post here.

The matter was heard before Keane CJ, Jacobson and Lander JJ, and concerned part of the matter before Nicholas J. Specifically, it concerned four advertisements, or 'sponsored links' which appeared on the Google search page. The 'sponsored links' were triggered by the insertion of key words concerning their competitors. By way of summary, the appeal concerned the following (at [5] to [8]):

5. The other aspect of the ACCC’s case at trial raised what is now the principal issue on the appeal. The primary judge held that in four instances relied on by the ACCC an advertiser had engaged in misleading and deceptive conduct by falsely representing that there was a commercial association or affiliation with its competitor, and that information regarding the competitor could be found by clicking on to what was, in fact, the advertiser’s web address. These instances concerned sponsored links triggered by the insertion of key words relating to “Harvey World Travel”, “Honda.com.au”, “Alpha Dog Training”, and “Just 4x4s Magazine”.
6. His Honour held, however, that Google did not make the representations contained in these sponsored links. His Honour held that Google did not endorse or adopt the advertisement but did no more than represent that the advertisements were advertisements.
7. The ACCC contends in its appeal to this Court that, given Google’s involvement in the process of displaying the sponsored links in response to a user’s search, the primary judge should have held that Google had engaged in misleading conduct.
8. Google supports the decision of the primary judge. It also contends that it was entitled to succeed on other grounds not accepted by his Honour. In this latter regard, it contends that each of the advertisements in question either was not misleading or that Google was entitled to rely upon the defence afforded by s 85(3) of the Act.

The Full Court upheld the appeal and held that Google had engaged in misleading or deceptive conduct. In doing so, the Full Court analysed what conduct was said to be misleading or deceptive and held that Google was more than a 'mere conduit' of information from the advertiser (at [88] to [90]): 

88. It is necessary to be clear as to what it is about Google’s conduct that is said to be misleading or deceptive on its part. Google’s conduct consists relevantly of the display of the sponsored link in response to the entry of the user’s search term in collocation with the advertiser’s URL. The display of the sponsored link is effected by Google’s engine as Google’s response to a user’s search. That which is displayed by Google is called up by Google’s facility as Google’s response to the user’s search. The clickable link, when clicked, takes the user directly to the advertiser’s URL.
89. An ordinary and reasonable user would conclude from these circumstances that it was Google who was displaying the sponsored link in collocation with the sponsor’s URL in response to the user’s search. Even if all these circumstances would not be apparent to ordinary and reasonable users, so that Google could not be “seen” by them to be more than a mere conduit, these circumstances show that Google is, in fact, much more than a mere conduit. The reaction of the ordinary and reasonable member of the class is not solely determinative of the issue. As Gummow J said in ACCC v Channel Seven the question is whether the “carrier is and is seen to be a mere conduit”; and as the primary judge acknowledged, the fact that a representation is not understood by the audience to be an advertisement for another person will not necessarily exclude Google from the scope of s 52 of the Act. His Honour said at [186]:

The mere fact that the relevant class may not have understood the representations to have been made by Google cannot be determinative of the question:Cassidy v Saatchi & Saatchi [2004] FCAFC 34; (2004) 134 FCR 585 per Moore and Mansfield JJ at [28].

90. Critical to this conclusion is the fact that the sponsored link is displayed on the screen in response to the user’s query which is made by the entry of selected key words. Thus, the user asks a question of Google and obtains Google’s response. Several features of the overall process indicate that Google engages in misleading conduct.

The misleading conduct was said to be Google's conduct because it responded to a query using search terms and informed the user that the content of the 'sponsored link' is responsive to the user's query (at [92]):

92. The conduct is Google’s because Google is responding to the query and providing the URL. It is not merely passing on the URL as a statement made by the advertiser for what the statement is worth. Rather, Google informs the user, by its response to the query, that the content of the sponsored link is responsive to the user’s query about the subject matter of the keyword.

The Australian Financial Review has reported that Google is considering an appeal to the High Court. The article is here.