Stuck in ‘Neutral’? Google, AdWords and the E-Commerce Directive Immunities

Lilian Edwards considers the foundation of the ‘immunity’ granted to information society service providers by the E-Commerce Directive. She asks whether the emphasis laid in the recent Attorney General’s Opinion in ‘the AdWords case’ on neutrality as a qualification for that immunity is justified.

Much press attention has been paid recently[1] to the trade mark law implications of the preliminary opinion of the AG in the conjoined ECJ cases of Google France v Louis Vuitton Malletier, Google France v Vaiticum Luteciel and Google France v CNRRH et al (hereafter, the ‘AdWords cases'),[2] but rather less to the potentially equally significant observations relating to intermediary immunity under Art 14 of the EC Electronic Commerce Directive 2000 (ECD).[3] This is perhaps because the main part of the AG’s opinion held that Google were not liable for trademark infringement by allowing users of their AdWords service to purchase keywords identical to registered or famous trade marks for the delivery of adverts on Google sites, and thus his remarks on Art 14 may be regarded, in the parlance of English lawyers, as obiter. Nonetheless their influence at this time is critical, not just for Google, but for many of the leading players in the e-economy. Although references from national courts are queued up like London buses, the ECJ has yet to give any judgment on how the immunities in Arts 12 to 15 of the ECD, designed primarily for a circa-millennial world of ISPs and ‘hosts’ , match up with the new class of intermediaries sometimes known as ‘Web 2.0’. These include online auction sites like eBay; sites based around shared user generated content such as Facebook, Flickr or Wikipedia; video and file sharing sites like YouTube; and of course search engines, which had not by 2000 become as indispensable to navigating the Internet as they indubitably are now.

Throughout Europe (and the globe) patent conflict has emerged as to the liability of these sites for the frequent legal infringements of its clientele.[4] The old adage of ‘don’t shoot the messenger’ appears to be waging war with the equally old idea of ‘with great profits comes great responsibility’. In some ways it is a moral rather than legal issue: if sites make money from the activities of their users, should they also be liable for the associated legal risks? Should eBay be liable for the trade mark infringements of those who sell counterfeit luxury goods on its site? Should YouTube (or equivalent services) be liable for the copyright infringing videos posted by its users? Should such sites be compelled to filter out illicit content in advance rather than remove post factum on notice? If such sites are held liable, what of similar but ‘non commercial’ sites such as Wikipedia? Across Europe, different courts have come out on both sides of this debate with no bright line of consensus visible.

This battleground seems a long way from the predominantly business-to-business conflicts around competitive or abusive use of trademarks which form the heart of the AdWords dispute(s). Yet, as this article will explore below, the issues are at present inextricably interlinked; and if not untangled from each other, the legal results may be extremely harmful both for digital innovation and for the users of the EC information society.

Paragraphs 126 to 146 of the AG’s opinion address the question of intermediary liability. The ‘safe harbours’ of Arts 12 to 15 are available only to ‘information society service providers’.[5] As a threshold condition, the AG had little problem in determining that both Google as search engine, and Google as provider of AdWords, a targeted advertising service, fell into this category. Some doubt had been expressed whether the service of search, provided for free by Google to users, was one ‘normally provided for renumeration’, as the ECD requires. However the ECD recitals also explicitly referred to ‘tools allowing for search’ (recital 18).[6] The AG however pointed out that the service was provided ‘in the expectation of remuneration’ (para 133), albeit from advertisers rather than from users; and that nowhere did the ECD take the opportunity to explicitly exclude either search or advertising services. Accordingly he held that ‘the provision of hyperlink services and search engines falls squarely within the notion of information society services’. (A similar decision was reached tentatively (and also obiter) recently in the English courts in Metropolitan v Google.[7])

The second point the AG turned to, however, was whether Google fell within the scope of Art 14 of the ECD, ie was it an information society service consisting of ‘storage, at the request of the recipient of the service, of information provided by that recipient’.[8] Under Art 14, such a service provider is free from liability for both civil and criminal acts of the users of the service, unless it receives actual or, in the case of claims for damages, constructive notice of such activity. Here, crucially, the AG did draw a clear distinction between Google as the provider of a free search engine and the Google Adwords service. AdWords, he said, involved the storage of certain content, ie the text of the ads placed, and the hyperlinks to the sites advertised (para 138); the definition of a host was thus ‘nominally’ fulfilled. The AG also rejected the argument that hosting in Art 14 excluded the provision of a service which was more than ‘purely technical’. This was, in this author’s view, wise: if that distinction had stood, the BBC website, the Times Online website, and most university sites, to name just a few, would probably have been excluded – indeed, even cloud computing services, surely quintessential Art 14 hosts, which provided data processing as well as pure storage might have been left out.

However, we come now to the more controversial section. In the AG’s view, Google’s provision of AdWords - as opposed to the ‘natural results’ of its search algorithms – still did not fall under the Art 14 safe harbour. This was because AdWords results ‘were no longer a neutral information vehicle’. ‘The underlying aim’ of Art 14, according to the AG, was ‘to create a free and open public domain on the Internet’. UK readers, more accustomed to applying the phrase ‘public domain’ to works free of copyright protection, may find this connection puzzling. It seems however that the AG was thinking of the public interest in freedom of expression and, in particular, lack of censorship by online intermediaries. His interpretation of Art 14’s ‘aim’ came, he explained, from Art 15, which is ‘the very expression of the principle that service providers which seek to benefit from a liability exemption should remain neutral as regards the information they carry or host’. Article 15 requires that states do not place a general obligation on ISSPs to monitor the content or activity of users.

Since Google made money from presenting the text and links that were derived from the AdWords programme, it was, the AG argued, no longer ‘neutral’ as regards this content and did not benefit from Art 14 in relation to it. By contrast, the ‘natural results’ of the Google search engine – those generated by ‘automated algorithms that apply objective criteria in order to generate sites likely to be of interest to the internet user’ remained ‘neutral’ and thus immune from liability. One might perhaps argue that Google’s whole business model is dependent on reliably producing these ‘natural results’ – but the AG had an answer ready for this, in that while Google might have ‘an interest, even a pecuniary interest’ in displaying relevant search results generally, it did not have such an interest in ‘bringing any specific site to the internet user’s attention’.

This rather novel argument raises a number of controversial points.

First, what is the legal basis of the AG’s reliance on ‘neutrality’ as a threshold condition for immunity under Art 14? As noted, it is alleged to be Art 15, in some kind of purposive form. Yet there is little support for this approach elsewhere in the ECD. The very fact that, as already noted, to qualify as an ISSP, a service provider must ‘normally’ be looking for remuneration seems to imply that neutrality, in the financial sense the AG raises, was never contemplated at the time of drafting. More precisely, what explicit consideration there is for the issue of ‘neutrality’ seems to be found in Art 14(2), which provides that the hosting immunity is lost ‘when the recipient of the service is acting under the authority or the control of the provider’. This is often regarded as inserting an equitable principle, roughly akin to common-law ideas of vicarious liability or agency. So we might ask if the advertiser who misuses a trade mark in the text of an AdWords advert (or indeed, who libels someone or falsely advertises) is acting under the ‘authority or control’ of Google as the provider of the AdWords platform. It seems unlikely, especially as it would also be in breach of the explicit terms of service. For sure, that advertiser could not publish that material to the world without AdWords, and so there is conceivably some kind of authorisation – but that would be true of any normal hosting service provider, including a traditional ISP. If this interpretation was adopted, the scope of Art 14 would be reduced to zero.  

Interestingly, there is a similar provision about vicarious liability in the US Digital Millennium Copyright Act [9] which does explicitly say that immunity can be lost where the host has the right and ability to control the infringing activity and ‘receive[s] a financial benefit directly attributable to the infringing activity’. By contrast the Commission seems to have chosen not to mention ‘financial’ neutrality at all. 

Secondly, the distinction drawn by the AG between the ‘natural’ or ‘objective’ results of search and the ‘manipulated’ results in which Google has a financial interest is simply not one which stands up to factual scrutiny. Google’s search algorithms are partly public (PageRank is patented, and due to run out next year) but partly secret - to avoid being abused by sites hoping to improve their ranking. What is apparent is that the so-called ‘natural’ results are simply one search engine’s opinion about what results might be relevant to a searcher’s keywords; they are not some existential truth. These so-called ‘natural’ results are also not un-manipulated. Google put a great deal of effort into preserving their rankings from abuse – so-called ‘Google-bombing’, or more politely, search engine optimisation, as well as from filling them up with junk or ad-filled pages – and are well known to send organisations which try dirty tactics to ‘Google Hell’,[10] BMW were famously consigned to ‘Google Hell’ in 2007 when Google noticed conspicuous ‘optimisation’ going on. Less thrillingly, Google also tailor the ‘natural’ results for regional relevancy and respond to notice and take down requests like most hosts.

Can a clear bright line be drawn between at least some of these discriminatory activities – which are intended to maintain the reputation of its engine and protect it from legal and financial risk – and the creation of the links that go into the ‘AdWords’ box on the right of the screen? This author is not so sure. If BMW pay the most for the keyword ‘sports car’ and their landing site has a sufficiently high quality score, then their ads go to the top of a generated AdWord listing. On the other hand if BMW attempt to play fast and loose with Google’s algorithms, the ‘natural’ search results for ‘sports car’ will not include BMW (or only on page 3,071). There seems no good reason why the positive result is ‘non neutral’ but the negative result is ‘natural’.

Perhaps then, both the ‘natural’ results and the ‘paid for’ results are ‘non-neutral’, and so neither deserves Art 14 immunity? But if so, the impact on the public interest in free and comprehensive search would be very heavily dented. Even Google the search engine, as opposed to Google the AdWords provider, might suffer, if judgment calls had to be made on how much meddling with results could be tolerated before ‘neutrality’ was lost. The fear that what was once called publisher immunity might be lost if editorial control was asserted is exactly the fear again that Art 14 was designed to allay, in response to the well known history in the US of the Prodigy [11] and Compuserve cases.[12] The Commission itself seems well aware of the value of preserving the immunity of search engines from liability: in the First Report on the ECD prepared in 2003,[13] they noted:

‘Whilst it was not considered necessary to cover hyperlinks and search engines in the Directive, the Commission has encouraged Member States to further develop legal security for internet intermediaries. It is encouraging that recent case-law in the Member States recognizes the importance of linking and search engines to the functioning of the internet.’ 

These do not sound like the words of an executive who wishes to see as a matter of policy the principle revenue stream of search engines in Europe threatened by uncontrolled legal risk. What would the consequences be of a rollback of immunities for hosts and search engines in Europe? At worst, possible withdrawal from some or all EC markets. We already have a worked example of this in the shape of the current trial for criminal libel going on in Italy against four Google employees.[14] The case concerns a libellous video posted by schoolchildren on the host service Google Video in Italy. If Art 14 immunity holds, or its local Italian equivalent, Google should be exculpated. If not what will the consequences be? A partitioning of search services in the Single Market is the last thing the European e-economy – and digital inclusion - needs.


Thirdly, it is important to note that this decision is not just about Google, but about any service provider who hosts adverts for pay, or, indeed, is not ‘neutral as regards the information they carry or host’. What will be enough to render a service provider ‘non-neutral’? Again, this is potentially both wide and vague enough to render the protection of Art 14 nugatory. What about the editorial content of the Times Online, which brings in the eyeballs, which attract the advertisers? The adverts themselves on the Times site? The adverts on a local community web site, which are a small revenue stream for a largely non-commercial site? In which, if any, of these scenarios, is the host still ‘neutral’? This is, again, exactly the kind of hazy distinction that Art 14 was designed to consign to history. The concept was that the information society would thrive on protection of ISSPs from liability, but this would be balanced by a remedy of notice and take down (NTD). Although NTD has its own problems in relation to freedom of expression, of which I have written elsewhere,[15] it is certainly better than the alternative of rolling back immunities to the uncertain days of Prodigy.

All in all, these final comments in the AG’s opinion seem unnecessary. The intention seems to be to draw an ethical line (rather than legal?) between those who make profits out of monetising content provided by second parties, and parties who provide ‘neutral’ hosting services and ‘deserve’ immunities. But this debate is already anticipated in Art 14. Article 14(1) already clearly says that, in relation to claims for damages, immunity is lost if a service provider is ‘aware of facts or circumstances from which the illegal activity or information is apparent’. This constructive knowledge test, as yet under explored in the ECJ, is surely the proper route for ascribing liability where a platform is truly complicit with wrongdoing, as opposed to simply monetising the content it publishes (as real world businesses such as advertisers and newspapers have done for years). Is there a need to invent a new, ill founded and problematic category of ‘neutral’ intermediaries? Similarly, Art 14(2), discussed above, also provides an appropriate test for ‘complicity’. These issues will no doubt be discussed at great length when the current stack of eBay references finally reach the ECJ. But until then, this innovation is an unnecessary gloss on Art 14. It will be fascinating to see if the ECJ retains it when their final judgment appears in 2010. In the meantime, those of us who long for some sense of certainty and harmonisation in this field can await the long delayed review of the ECD system of immunities, including search engine liability, which was in theory already scheduled for 2009.[16]

Lilian Edwards is Professor of Internet Law at the University of Sheffield.

This article is based on research commissioned by Google UK. Any opinions expressed herein are however solely those of the author.


[1] See for example, forthcoming article by Andreas Ruhmkorf, SCRIPT-ed, December 2009 ( ) which this author has seen in draft.

[2] Opinion of the Advocate General Poiares Maduro, 22 September 2009, in Joined cases C-236/08, C-237/08 and C-238/08.

[3] Directive 2000/31/EC.

[4] See discussion by this author in ch 1 of Edwards L and Waelde eds Law and the Internet (3rd edn, Hart, 2009), pp67-69.

[5] Art 2(a), ECD.

[6] See also ‘search engines’ included in the non-exhaustive list of examples of ISS in Commission proposal of 1998 COM(1998) 586 final, page 15.


[7] [2009] EWHC 1765 (QB).

[8] It is important to note that the opinion says nothing about Google’s potential liability for linking but merely deals with hosting of text. Accordingly there is no discussion either of possible Art 12 or 13 exemptions from liability. This seems a little odd given that liability ‘for’ AdWords surely involves not just liability as a host of the text itself, but provider or generator of the link to the advertised site. The upcoming reference from the UK AdWords case of Interflora v Marks and Spencers [2009] EWHC 1095 (Ch) is likely to ask the ECJ to take into account Art 12.

[9] Title 512(c).

[10] ‘Google Hell’ is known more prosaically as the ‘supplementary index’ but further details as to how one can gets in or out of it, are unknown. See further ‘Condemned to Google Hell’, Forbes, 30 April 2007, at .

[11] Stratton Oakmont v Prodigy 1995 NY Misc. LEXIS 229 (NY. Sup. Ct. Nassau, Co., 1995).

[12] Cubby v Compuserve 766 F Supp 135 (SDNY, 1991).

[13] First Report on the application of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) Brussels, 21.11.2003 COM(2003) 702 final, para 4.6.

[14] See further discussion at and in ‘Prosecutors Press Case Against Google In Italy’ New York Times, 25 November 2009, at .

[15] Supra, n 5 at pp73-76.

[16] See . I am indebted to Joris van Hoboken at for this reference.

Published: 2009-12-13T09:56:15


      Please wait...