Google cleared by High Court in deceptive AdWords case

The company did not violate Australian law by allowing companies to use words related to their competitors in advertisements

The High Court cleared Google on Wednesday of violating fair trade laws by allowing companies to publish advertisements containing their competitors' names, handing a defeat to the country's fair trade regulator.

The High Court found that Google did not have a hand in creating paid-for sponsored links sold through its AdWords advertising product, through which some companies used competitors' business or product names in headlines.

"Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations," according to a news release from the High Court. "Accordingly, Google did not engage in conduct that was misleading or deceptive."

The judgment, handed down by the High Court in Canberra, brings an end to a six-year legal battle.

In a statement, Google said it welcomed the court's "unanimous decision that Google cannot be held responsible for the ads that advertisers create for Google's search engine."

The Australian Competition and Consumer Commission (ACCC), which is responsible for ensuring compliance with fair trade and consumer protection laws, brought a case against Google in 2007. It alleged the Internet giant sold misleading advertisements that allowed companies to use words related to their competitors between 2005 and 2008.

In a statement Wednesday, the ACCC said the court's decision confirmed that such advertising practices are bad for consumers.

"It was not disputed in the High Court that the representations made in sponsored links by advertisers were misleading or deceptive," the agency said. "It remains the case that all businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers."

The 11 advertisements in question contained business names, product names or Web addresses for a competitor that had not purchased AdWords advertisements from Google. AdWords, a key revenue source for Google, allows companies to bid for keywords that trigger ads that are then matched to people's search queries.

In one example, AdWords containing the name Harvey World Travel were purchased by a competing Australian company called STA Travel. Those who searched for Harvey World Travel saw sponsored links for STA Travel.

In October 2011, a Federal Court judge found that some of the ads were misleading but that in some instances Google had only facilitated the representations of advertisers.

The ACCC appealed. The Full Federal Court found in April 2012 that four advertisements were misleading and breached the Trade Practices Act 1974, ordering Google to put in place a consumer compliance program.

Google appealed that decision, which brought the case to Australia's High Court. Google has maintained it acts as a publisher and was not responsible for the content and representations made by AdWords purchasers.

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