An Australian court has taken a bite out of Google's search ads.
The Australia Federal Court earlier today ruled that Google was "misleading and deceptive" when it displayed ads for a company called CarSales in search results related to Honda Australia. Google was displaying the ads between March 2006 and July 2007. The court took issue with CarSales' ads indicating a link between its operation and Honda Australia.
"Google's search engine calls up and displays the response to the user's query. It is Google's technology which creates that which is displayed," the Full Court said today. "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's an unfortunate turn of events for Google, which had won an earlier ruling in Federal Court on the same matter. However, that ruling didn't come down from the full Australia Federal Court bench; this one did. The earlier ruling was appealed by the Australia Competition and Consumer Commission (ACCC) in October.
Google's paid search ads have been a lightning rod of controversy over the years as companies attempt to control what's displayed around search results related to their operation. In 2008, for example, identity-theft-protection firm NameSafe sued competitor LifeLock for allegedly using its name in ads to direct users to its site. The suit underscored the importance of search results and ads in today's hotly contested markets.
Search's importance is what made the ACCC bring its case to the Australia court, the organization's chairman Rod Sims said today in a statement.
"The ACCC brought this appeal because it raises very important issues as to the role of search engine providers as publishers of paid content in the online age," Sims said. "This is an important outcome because it makes it clear that Google and other search engine providers which use similar technology to Google will be directly accountable for misleading or deceptive paid search results."
Google's loss requires the company to pay all the costs related to the lawsuit. The company must also establish a compliance program to ensure consumers aren't misled by any ads.
Google did not immediately respond to CNET's request for comment.