Generating content in the internet age

In a significant blow to Google’s business model, in Australian Competition and Consumer Commission v Google the Full Court of the Federal Court of Australia has unanimously found that Google engaged in misleading or deceptive conduct by publishing a competitor’s web address in sponsored links appearing in response to an enquiry made through Google’s search engine. The decision overturns an earlier finding that Google was a mere conduit of the misrepresentations.

While the decision has received much attention, there has been less emphasis on the possible ramifications for non-keyword advertising programmes, including "organic" search results.

In summary, the court found that Google’s prominent display of the user’s search term as a heading in conjunction with the competitor’s website link was misleading or deceptive. The competitor’s website was generated because it had purchased certain keywords through Google’s AdWords programme, from which Google derives most of its revenue. What was critical was that Google triggered the link in response to the user’s search enquiry using Google’s own algorithms.

The court rejected Google’s claim that it was merely a conduit for the advertiser:

"What appears on Google’s webpage is Google’s response to the user’s query. That it happens to headline a keyword chosen by the advertiser does not make it any the less Google’s response… Google’s conduct cannot fairly be described as merely passing on the statements of the advertiser... it is an error to conclude that Google has not engaged in the conduct of publishing the sponsored links because it has not adopted or endorsed the message conveyed by its response to the user’s query."

On 22nd June 2012 Google was granted special leave to appeal the decision to the High Court of Australia.

"Organic" search results
The court’s reasoning leaves open the possibility of future proceedings against search engine providers in connection with misleading organic search results, not just those generated through keyword advertising. Organic search results, such as those using Google’s search engine, highlight the search terms in bold. Businesses are increasingly spending more of their marketing budget on search engine optimisation (SEO) techniques to increase their ranking in organic search results. Nevertheless, it is the search engine provider, through its proprietary algorithms, that responds to the user’s search.

But what if those bold search results are themselves misleading or deceptive? Some companies have found that a search for their trademark using a search engine results in other descriptive terms also being highlighted in bold. The situation occurs where the trademark consists of certain terminology within it (eg, as a suffix within the trademark), which corresponds to an equivalent word. If the search engine provider highlights descriptive terms in bold that were not searched for in response to a query for a company’s trademark, the search engine provider may be representing that the two terms are synonymous. This may damage the value of the company’s trademark and reduce the effectiveness of SEO strategies, prompting complaints to consumer protection regulators.

Adopting the court’s reasoning, the search engine provider makes the representation by calling up and displaying the response to the user’s query using its own technology. It is not merely repeating or passing on statements made by other businesses. The enquiry is made of the search engine provider by the consumer, and if the search engine provider’s response is misleading or deceptive, it may be liable. This potentially puts the organic algorithm aspect of a search engine provider’s business model at risk.

The High Court of Australia will now determine whether search engine providers are liable for misrepresentations generated in response to user-initiated enquires. In any case, it serves as a timely reminder that all businesses are responsible for the content that they publish online. Businesses could potentially be liable if that content is misleading or deceptive, regardless of whether the business adopts or endorses the message conveyed or perhaps even whether the content is generated through a customer query or comment.

Innovative businesses, particularly those in high-technology industries, should not assume that legislative change is required before their business models are subject to consumer protection laws.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

Unlock unlimited access to all IAM content