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Google AdWords in the High Court

Tuesday 11 September, 2012
Google and The ACCC are in the High Court today over Googles Adwords advertising service.

Google Adwords service is where business bid for for a position in the sponsored sections of Google search result listing pages and other Google network sites.  One of the features of  Adwords is that Sponsored listing advertisers are able to incorporate the actual search keyword that was used in the users search query, into the headline of their add. This allows advertisers to nominate a competitors name, product or trademark as a keyword and have that keyword inserted into the headline of their add, which then links users to the advertisers’ website.

The ACCC started proceedings in 2007 alleging Google had contravened section 52 of the Trade Practices Act 1974 - now s18 of Australian Consumer Law. The ACCC claim Google was "engaging in conduct that was misleading or deceptive, or likely to mislead or deceive" when Google displayed eleven sponsored advertisements on the their search results page. The headline of each of the advertisements in question comprised a competitor’s name or trade mark, which linked users to the advertisers’ website. The court ruled in favor of Google and found that "although a number of the sponsored link advertisements were misleading or deceptive, Google had not made the representations and was merely communicating them to the user as an intermediary". However, the Full Federal Court overturned this decision and found that "Google had engaged in misleading conduct by providing the sponsored links as a response to users’ queries".

The current issue before the Court is whether Google is responsible for the "misleading implied representations" made by the advertisements.
Google says that its not responsible and argues:
1. The sponsored link consists of three elements, the content of which is dictated by the advertiser, namely, the headline, advertising texts and the URL, and these would not exist but for the creation and direction by the advertiser;

2. Users of the search engine understand that the sponsored links are advertisements paid for by the advertiser; and

3. The misleading conduct alleged was the making of particular representations, namely, a commercial association or other relationship between two entities identified in the advertisement.

The ACCC claims that Google should be held liable for the breach because:
1. Google used its proprietary algorithms to determine which particular advertisements would be eligible for display in response to a given query and determined which from amongst those eligible advertisements would be published, in response to a user’s query.

2. Google inserted the keywords from the user’s queries into the headlines of the advertisements.

3. Google collocated the headline with the advertiser’s URL and gave the headline the functional features.

The ACCC also claims Google employees are assisting advertisers to use names and products of competitors as keywords.

The implications for Google are immense as this will have a direct impact on their "Rivers of Gold" Sponsored advertising model. Google have a responsibility to ensure that trademarks, business names and products that appear in their search result do not mislead search users. After all if this conduct was occurring in the traditional print world of newspapers and magazines, would they get away with it?

The High Court’s case information and transcripts can be viewed at the High Courts website.

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