Internet search engine Google has been found guilty of posting misleading and deceptive ads, with an Australian court upholding an appeal by the competition watchdog.
The Australian Competition and Consumer Commission (ACCC) lost a Federal Court case against Google in September 2011, which claimed Google was engaged in conduct likely to mislead or deceive the public.
The ACCC initially claimed that the links to 11 ads were misleading because they included a headline consisting of a trading name, a product name or a website address of the advertiser's competitor but which also served as a link to the advertiser's website.
It appealed in four of the 11 cases.
In the Federal Court in Sydney today, Justice Peter Jacobson overturned the original decision and granted the appeal.
In judgment papers, Justice Jacobson along with Chief Justice Patrick Keane and Justice Bruce Lander said the primary judge "erred in failing to conclude that Google engaged in misleading and deceptive conduct in four cases".
In one of the four cases, it was revealed that between March 2006 and July 2007 Google published results on its site which were advertisements for the CarSales website but which linked to the Honda Australia website.
"By clicking on the headline to the advertisement, users of the website would be taken to the Honda Australia website and thereby engaged in conduct that was misleading or deceptive or likely to mislead."
The court found that similar misleading results were posted on Google in the three other cases which involved Harvey World, Alpha Dog Training and Just 4x4 magazine advertisements.
The justices said Google should "implement a compliance program" to stop this from happening again.
They also ordered Google to pay the ACCC's court costs.
Google said it was disappointed by the decision.
"We are disappointed by the Federal Court's decision that Google should be responsible for the content of four particular ads on its platform," a Google spokesman said in a statement.
"Google AdWords is an ads hosting platform and we believe that advertisers should be responsible for the ads they create on the AdWords platform.
"We are currently reviewing our options in light of the court's decision."
It is estimated that online search advertising in Australia through search engines such as Google is worth around A$830 million per year.
Google is the dominant search engine in the Australian market.
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