The case arose after some Google customers set up their sponsored links using the names of competitors.
If clicked on, the sponsored links took customers who were searching for one company to the website of a rival firm.
The Australian Competition and Consumer Commission (ACCC) said Google was liable for the misleading information under the Trade Practices Act, but Google argued it only displayed the ads and could not be held responsible.
It found that Google did not itself create the sponsored links that it displayed, and ordinary users of the search engine would have understood they were ads and it was the advertisers making the representations not Google.
The court found that reasonable users would not have concluded that Google adopted or endorsed the representations.