Big Loss for the Internet Giant Google

|

It’s been found guilty of deceptive and misleading conduct in the Federal Court.

It’s the first time that a court anywhere in the world has ruled that Google is liable for civil violations; as Meredith Griffiths reports.

MEREDITH GRIFFITHS: Google is the first stop for most people who need answers. But now the company has been found guilty of misleading or deceptive conduct.

The Federal Court matter relates to four different sets of ads that appeared on Google pages between May 2007 and April 2008.

Rod Sims is the chairman of the Australian Competition and Consumer Commission.

ROD SIMS: Essentially, when you typed in the name of a well known company, and the one they caught used most was if you typed in ‘Harvey World Travel’ then you’d be taken to a site that had Harvey World Travel at the top of it. And if you then clicked on the web address sitting below Harvey World Travel you then got taken to the site of STA Travel.

STA Travel had paid Google for the advertising, Harvey World Travel had not. So the conduct is misleading because you are – you think you’re dealing with Harvey World Travel and you end up on an STA website. At best you may think there’s some link between those two when, in fact, there isn’t.

MEREDITH GRIFFITHS: Similar things happened when people searched for “Just 4x4s Magazine”, for Honda or for dog trainers.

The ACCC first took Google to court over the matter in 2007.

Google argued it wasn’t responsible for the misleading effects of the responses, saying it is apparent to the user that Google is not more than a conduit for the advertisers. And the judge ruled that Google did not endorse or adopt the ads

But the ACCC appealed against that.

Rod Sims again.

ROD SIM: We argued first of all that Google had constructed a technology system that, or an algorithm, whatever the relevant term is, that allowed this to happen and actively promoted that.

MEREDITH GRIFFITHS: The Federal Court found that Google’s conduct cannot fairly be described as merely passing on the statements of the advertiser, but Google it is actively responding to an inquiry by a user.

Rod Sims says the ruling is very significant for Australia

ROD SIMS: These sorts of companies are really sort of trying to maximise the advertising. That’s how Google and other online search entities work. And so we’re setting boundaries of what’s allowed and what’s not allowed through this court judgement.

So it’s hugely important given the growth in internet advertising.

MEREDITH GRIFFITHS: And it could have consequences overseas.

Assistant Professor Ben Edelman studies Google as part of his job with Harvard Business School.

BEN EDELMAN: There have been quite a few disputes elsewhere in the world, primarily in the United States, but this is the first time where a court has ever ruled that Google is liable for the civil violations. The noteworthy rulings have either been previously been either that Google is not liable or that there are exceptions for criminal matters, like drug trafficking.

This is particularly important because it opens the door quite a bit more widely.

MEREDITH GRIFFITHS: Ben Edelman expects this will spark more court cases against Google. But he’s not sure if the internet giant will change its practices overseas.

BEN EDELMAN: Google will try to say that this decision is an outlier, it’s an Australia specific decision; frankly, that it’s a mistake. Google will say that the court got it wrong and that it shouldn’t have to comply with this law worldwide. I wouldn’t be holding my breath for Google to comply with this ruling in the United States anytime soon.

MEREDITH GRIFFITHS: For a company with the motto ‘don’t be evil’ is this an embarrassing dent to its reputation?

BEN EDELMAN: You know Google’s ads have been pretty evil all along. They’ve had ads that claimed X when they did Y. Ads that promised free ring tones but what you’d get when you went there was neither free nor a ringtone.

It’s been a real thorn in Google’s side because folks have been complaining for the better part of a decade about bad ads. And now, finally, a court is telling Google that they definitely need to do more about this.

MEREDITH GRIFFITHS: In a statement, Google says it is disappointed by the Federal Court’s decision and is reviewing its options.

The company says that it believes that advertisers should be responsible for the ads they, but that ads are removed if they violate Google’s terms and conditions.

Leave a Reply

Your email address will not be published. Required fields are marked *