Australian regulator alleges Google engaged in "misleading and deceptive" conduct

July 12, 2007

Australian regulator alleges Google Australian regulator and consumer watchdog, the Australian Competition and Consumer Commission (ACCC), is alleging that Google and one of its advertising clients engaged in misleading and deceptive conduct in relation to sponsored links that appeared on Google’s web site. Google has already dismissed the allegations as “without merit”.

The ACCC has instituted legal proceedings against Trading Post Australia (owned by Sensis), Google Inc, Google Ireland and Google Australia alleging that Trading Post Australia contravened the Trade Practices Act in 2005 when the business names “Kloster Ford” and “Charlestown Toyota” appeared in the title of Google sponsored links to Trading Post’s web site.

Kloster Ford and Charlestown Toyota are Australian car dealerships who compete against Trading Post in automotive sales. The ACCC alleges that Google, by causing the Kloster Ford and Charlestown Toyota links to be published on its web site, also engaged in misleading and deceptive conduct.

While Google does not allow advertisers to buy sponsored results for registered trademark they do not own, there is no such rule for company and product names.

This is the first action of its type globally, according to the ACCC. While Google has faced court action overseas, particularly in the US, France and Belgium, this generally has been in relation to trademark use. Although the US anti-trust authority the Federal Trade Commission has examined similar issues, the ACCC believes it is the first regulatory body to seek legal clarification of Google’s conduct from a trade practices perspective.

Google Australia has been quick to defend itself against these allegations, with Rob Shilkin, head of corporate communications & public affairs at Google, issuing the following statement:

“Google Australia believes that these claims are without merit and we will defend against them vigorously. They represent an attack on all search engines and the Australian businesses, large and small, who use them to connect with customers throughout the world.”

The ACCC is also alleging that Google, by failing to adequately distinguish sponsored links from “organic” search results, has engaged and continues to engage in misleading and deceptive conduct in breach of the Trade Practice Act.

The ACCC is seeking injunctions restraining Trading Post from representing through sponsored links an association, sponsorship or affiliation with another business where one does not exist, and stopping Google from publishing these links. It is also seeking injunctions restraining Google from publishing search results that do not expressly distinguish advertisements from organic search results.

The matter is scheduled for a directions hearing in the Federal Court, Sydney, on 21 August 2007 before Justice Allsop.

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