The Chicago Tribune notes that:

No agency or critic has articulated a coherent theory of how Google harms consumers.

Ahhh, wrong. The Australian Full Federal Court has just found Google guilty of misleading and deceptive behavior in violation of Australia’s Competition and Consumer Act 2010. The judgement is available here. But on my reading, the decision potentially spells problems for all search engines and is not necessarily limited to linked advertisements.

The Court finds that Google cannot rely on the ‘publishers defense’ available under the Australian law because:

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.

Further:

Although the keywords are selected by the advertiser, perhaps with input from Google, what is critical to the process is the triggering of the link by Google using its algorithms. That is a further reason to conclude that it is Google’s conduct as a principal, not merely as a conduit, which is involved in each of the four instances that form the subject matter of this appeal.

The circumstance that the sponsored link is displayed as Google’s response to a user’s insertion of a search term into Google’s search engine prevents any analogy between this case and the case of the bill-board owner or the owner of a telephone network or the publisher of a newspaper or a telecaster who simply displays an advertisement of another. … Google’s search engine calls up and displays the response to the user’s enquiry. 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.

It is no answer to the ACCC’s case to say that it is apparent that the sponsored links were advertisements for persons other than Google. The question is not whether the advertisement was an advertisement for Google or for a third party, but whether Google’s conduct in response to the user’s interaction with Google’s search engine was misleading. As an issue of fact, that question reasonably admits of only one answer.

Note that the case has nothing to do with market power – so the same result holds for all search engines. Further, it is not clear that the decision is limited to ‘sponsored links’. The judgement appears to place Google in the position of providing information to a consumer in response to a query through the search engine, and requiring that Google in some sense be liable for the veracity of the information. While the case related to sponsored links and Adwords, it is arguable that the judgement could apply to all information provided ‘by Google’ in response to a search. So if I search for ‘Car A’ and one of the (non-sponsored) results of this search is ‘Car B’, then this could be interpreted as Google providing me with information that could mislead me to believe that ‘Car A’ and ‘Car B’ were somehow connected. In other words, it could be argued that Google is responsible for the veractiy of any information it ‘generates’ via the search engine.

It seems to me that this is a complete misunderstanding of the automated nature of both Adwords and the Google search engine. While it seems perfectly reasonable that advertisers who use Adwords and parties who provide web content should not ‘mislead and deceive’, it is hard to see how an automated search engine can be held liable when that information is presented to a customer.

 

8 Responses to Google’s loss spells problems for all search engines

  1. Tony Healy says:

    I disagree that the judgement represents a threat to search engines generally.

    The judgement restrains Google from displaying results that are deliberately misleading. It does not impose any requirement on search quality beyond that. It is quite precise.

    Prohibitions on misleading conduct are a normal and necessary part of business conduct, and one that search engines can easily comply with while continuing to provide innovative services.

  2. Stephen King says:

    Tony – if a search engine has to ‘not display results that are deliberately misleading’ for a search, then how could this be done? it would have to check every web page that could be accessed. This would be impossible. Even on AdWords, if it is misleading and deceptive for company A to have their URL come up under the name Company B (regardless of any other wording) then this will significantly limit AdWords – Google will have to vet the buyers at every auction.

  3. Tony Healy says:

    Google and the other search engines do actually apply rigorous checks to pages to ensure, as far as possible, they are relevant and not misleading. Additionally, they check for many known efforts to deceive the search engine, and penalise pages and sites where that activity is detected.
    And that is for the difficult case of random pages on the web, where meaning and relevance must be deduced by clever algorithms.
    The situation for paid advertisements is far, far simpler, both algorithmically and as a business process. Advertisements undergo a business transaction with Google, as you point out. That transaction makes it trivial for Google to verify that the ad is not misleading.
    The argument that it’s not feasible is Google spin. Hopefully our judiciary and government have matured enough not be intimidated by claims they don’t get it. They actually get it very well.

  4. Andrew Whitby says:

    I agree with Tony’s interpretation. There’s a clear distinction between Google’s search and advertising functions. Search is more of a public service, and it would seem unreasonable to hold Google responsible for any specific search result, as long as their algorithm is ‘fair’. In contrast advertising is very much a commercial service, and it seems reasonable to expect Google to take some responsibility for vetting the content it displays in exchange for payment.
    Who knows what the court would say if tested, but reasonableness suggests the level of vetting should be proportionate to the payment Google receives. That is, generally not much – but then, for example, automatically checking a trademark database (and flagging for manual followup if necessary) is trivial, and yet Google has for some time intentionally followed a policy of not doing so in order to boost revenues.

    See http://news.cnet.com/2100-1038-5190324.html.

  5. Thomas Esmond Knox says:

    So the same rule should apply for all forms of advertising?

    How many times should Google check the veracity of the ad?

    Once? Once a week? Once a day? 10 times a day?

    Automatically checking a trademark database?

    What if it is a Registered Business Name but not a trademark? OK? Not OK? 

  6. […] as bricks-and-mortar publishers. This is a good outcome. The Full Federal Court decision created a regulatory mess and the High Court has fixed it up. I discuss this in more detail at the […]

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