Melbourne: Dealing a severe blow to Google Inc, an Australian court on Tuesday found the search giant guilty of breaching trade law by displaying "misleading" sponsored links at the top of its search results.
The judgement by the Federal Court means that Google will now have to establish a "compliance programme" so that advertisers will not be able to post misleading or deceptive advertisements in the future.
The Australian Competition and Consumer Commission (ACCC) appealed last year after a judge ruled Google's conduct had not been in breach of the Trade Practices Act.
However, the court has now overturned that decision, concluding the search engine's conduct did breach the law, ABC News reported.
"The enquiry is made of Google and it is Google's response which is misleading," the court said.
"Although the key words are selected by the advertiser, perhaps with input by Google, what is critical to the process is the triggering of the link by Google using its algorithms," it said.
ACCC chairman Rod Sims says the case raises important issues on the role of search engines as publishers of paid content.
"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," Sims said.
Google said it was "disappointed" by the Federal Court's decision that it should be held responsible for the content of advertisements on its platform.
"We believe that advertisers should be responsible for the ads they create on the AdWords platform," it said in a statement.