ACCC alleges Google adwords misleading

The Australian Competition and Consumer Commission (ACCC) has announced it has instituted legal proceedings in the Federal Court, Sydney, against Trading Post Australia Pty Ltd, Google Inc, Google Ireland Limited and Google Australia Pty Ltd alleging misleading and deceptive conduct in relation to sponsored links that appeared on the Google website.

The ACCC is alleging that Trading Post contravened sections 52 and 53(d) of the Trade Practices Act 1974 in 2005 when the business names "Kloster Ford" and "Charlestown Toyota" appeared in the title of Google sponsored links to Trading Post's website. Kloster Ford and Charlestown Toyota are Newcastle car dealerships who compete against Trading Post in automotive sales.

In other words, the ACCC says that Trading Post bought those names for use to link to its site when certain automotive sales searches were performed on Google even though Trading Post had no association with those names.

The ACCC is also alleging that Google, by causing the Kloster Ford and Charlestown Toyota links to be published on its website, engaged in misleading and deceptive conduct in breach of section 52 of the Act.

Further, the ACCC is 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 section 52 of the Act.

The ACCC is seeking:

• declarations that Trading Post contravened sections 52 and 53(d) of the Act
• declarations that Google contravened section 52 of the Act
• injunctions restraining Trading Post from representing through sponsored links an association, sponsorship or affiliation with another business where one does not exist
• injunctions restraining Google from publishing sponsored links of advertisers representing an association, sponsorship or affiliation where one does not exist
• injunctions restraining Google from publishing search results that do not expressly distinguish advertisements from organic search results
• orders that Trading Post and Google implement trade practices compliance programs
• an order that Google publish a notice on its website outlining the above, and
• costs.

The matter has been listed for a directions hearing in the Federal Court, Sydney, on 21 August 2007.

UPDATE: Google rejects claims (ZDNet). Previous story about Trading Post and Stickybeek.