Google Successfully Amends Adwords Contract to Add Arbitration–AdTrader v. Google

Some advertisers sued Google over promised refunds for alleged click fraud. Google’s 2013 Adwords contract said:

Google may add to, delete from or modify these Terms at any time without liability. The modified Terms will be posted at www.google.com/ads/terms. Customer should look at these Terms regularly. The changes to the Terms will not apply retroactively and will become effective 7 days after posting. However, changes specific to new functionality or changes made for legal reasons will be effective immediately upon notice. Either party may terminate these Terms at any time with notice to the other party, but (i) campaigns not cancelled under Section 4 and new campaigns may be run and reserved and (ii) continued Program Use is, in each case subject to Google’s then standard terms and conditions for the Program available at www.google.com/ads/terms. Google may suspend Customer’s ability to participate in the Programs at any time. In all cases, the running of any Customer campaigns after termination is in Google’s sole discretion.

In September 2017, Google updated its Adwords agreement, including a new arbitration clause, and sought to make the arbitration clause apply to claims for past behavior (i.e., “claims that arose before Customer or Advertiser first accepted any version of these Terms containing an arbitration provision”). Google notified advertisers through a blog post and “a red-alert bar notice at the top of their AdWords accounts which asked them to review the September 2017 AdWords Agreement and choose to accept, decline, or defer by clicking a radio button at the bottom of the notice.” Google took the position that continued use of Adwords after April 23, 2018 would constitute acceptance. Advertisers could decline the arbitration clause even if they accepted the remainder of the 2017 contract update:

30-day opt out period. Customer (both for itself and for any Advertiser that Customer represents) and Advertiser have the right to opt out of this Dispute Resolution Agreement. A Customer or Advertiser who does not wish to be bound by this Dispute Resolution Agreement (including its waiver of class and representative claims) must notify Google as set forth below within 30 days of the first acceptance date of any version of these Terms containing an arbitration provision (unless a longer period is required by applicable law). Customer’s or Advertiser’s notice to Google under this subsection must be submitted via webform available at adwords.google.com/nav/arbitration. An opt-out notice does not revoke or otherwise affect any previous arbitration agreement between Customer and Google or between Advertiser and Google.

The court says that Google’s approach worked:

an advertiser’s decision to decline the September 2017 AdWords Agreement to avoid being subject to the new arbitration provision is a voluntary choice given that he or she can easily opt out from that provision as discussed above

Thus, the court declined the plaintiffs’ request for a TRO against the arbitration clause.

So much could have gone wrong here for Google in light of its unilateral amendment clause that expects advertisers to keep checking terms. Courts are a little more tolerant of such clauses in B2B contexts, but only a little. I still view such overreaching provisions as potentially toxic even in the B2B context. Nevertheless, Google overcame these defects with at least two key choices:

* Prominent clear notice to all advertisers through the red-alert bar. The opinion doesn’t mention email notification, which I would have strongly recommended; and Google could have used an interstitial clickthrough page to force a choice among returning advertisers rather than just providing notice. Still, for any repeat advertisers, logging into the Adwords dashboard is surely a daily or hourly activity, so the odds of exposure to those folks was high.

* A clear and relatively easy opt-out process. I’d love to know how many advertisers actually opted-out of the new arbitration clause. We know generally that a supermajority of website users acquiesce to whatever defaults are established by the service, so the risk of consumer opt-outs is low and the service’s legal benefits in court are high. At this point, online services really have no excuse for not giving an opt-out choice to their users for arbitration clauses .

All told, it appears Google successfully navigated a tricky situation. I’m sending a bouquet of virtual roses to the Google lawyers who made those decisions.

Case citation: AdTrader, Inc. v. Google LLC, 2018 WL 1876950 (N.D. Cal. Apr. 19, 2018)