Google’s Legal Team Drops the Ball

Google Settles AdWords Complaint

Google recently settled a complaint in France related to its termination of an Adwords contract.  Essentially Google terminated a contract without giving notice to one of its advertisers.  Google had questioned the legality of the Advertiser’s products and suspended its AdWords account in November 2009. The Advertiser was selling software showing the locations of speed cameras and radar detectors. Apparently radar detectors are illegal in France.

Hypothetically speaking, if the French advertiser were to sue Google for breach of contract according to Canadian law, then the result would all depend on whether the product or service being advertised was “legal”.

Google’s Adwords Terms of Use (accessed October 28,2010) allows Google to terminate an Adwords contract for whatever reason.  However, such termination must be with notice:

Google may cancel immediately any IO [insertion orders or service agreements],any of its advertising Programs, or these Terms at any time with notice, in which case Customer will be responsible for any ads already run.

The contract does not specify the amount of notice or the manner of notice.  Presumably a court would “read-in” that such notice must be reasonable.  Thus Google could terminate an Adwords account for whatever reason, as long as it gave reasonable notice.  Reasonable notice would depend on the circumstances.

In the French case, there was no notice whatsoever. However, Clause 4 “Prohibited Uses” allows Google to cancel an Agreement immediately and without notice if an Advertiser advertises anything illegal:

4     Prohibited Uses; License Grant; Representations and Warranties. Customer shall not, and shall not authorize any party to…advertise anything illegal or engage in any illegal or fraudulent business practice. …Violation of the foregoing may result in immediate termination of this Agreement or customer’s account without notice and may subject Customer to legal penalties and consequences.

It appears that Navx, the French advertiser, was operating in a grey area of French law.  It was not selling radar detectors but software that could be used for radar detectors.

Google could have easily included a clause in its contract that allowed it to terminate the contract in its “sole and absolute discretion”.  For example, Facebook’s Terms of Service (accessed Oct. 28,2010) state that: “If you violate the letter or spirit of this Statement, or otherwise create risk or possible legal exposure for us, we can stop providing all or part of Facebook to you.”  The key wording here is “possible legal exposure”.  “Possible” could be a one in a million chance that an activity is illegal.  It is unlike Google’s Terms of Use where the activity must be illegal and not “possibly” illegal.  The term “legal exposure” is also less onerous than “illegal activity”.  Exposure does not necessarily mean that a court has ruled that a practice is illegal, it could mean that a question of illegality was simply raised.

Google’s current policy means that it must act as a judge and decide if something is illegal before terminating an Adwords account.  A minor tweaking of its AdWords contract could give Google more power to control the kind of advertising on its network.  It looks like Google’s legal team dropped the ball on this one.