Back in 2007, we wrote about a ridiculous lawsuit down in Australia, in which the Australian Consumer and Competition Commission (ACCC) was suing Google because other companies had purchased ads deemed to be "misleading" on Google. As we noted at the time, the ACCC seemed really confused about how Google worked, and the difference between being a self-service platform/tool and being a full-service advertising media company. While the ACCC ran into some trouble early on (its arguments were deemed "incomprehensible" by the first court) they actually won on appeal. The good news, however, is that the case moved up another level, and the High Court has overturned that decision with a pretty clear statement (pdf) on the basic issue:
Ordinary and reasonable users of the Google search engine would have understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations. Accordingly, Google did not engage in conduct that was misleading or deceptive.This may not seem like a big deal, but as Ali Sternburg rightly explains, having strong protections for secondary liability is a huge part of why the internet is so useful and innovative. In simple terms, we don't blame third party service providers for misuses by their users, because that takes away massive incentives for the service providers to innovate in the first place. It chills innovation in a major way.
Safe harbors from secondary liability are essential for Internet platforms and businesses, and it is encouraging when other countries affirm these principles.Unfortunately, some of these safe harbors have come under increasing attack over the past few years, as people who feel wronged go the Steve Dallas route, and assume that if they've been wronged, it makes sense to sue the company with the deepest pockets, rather than those actually responsible. But, when you do that, you create incredible incentives to effectively shut down any open platforms, because the threat of liability is just too risky. The stifling effects are enormous, whereas the benefit from protecting platform providers from liability for users' actions is tremendous. And, no, this doesn't mean that illegal activity is allowed. It just means that liability is properly focused on those who actually break the law.
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