The Full Court of the Federal Court of Australia today decided that Google was liable for misleading advertisements placed by advertisers. See Australian Competition and Consumer Commission v. Google Inc.  FCAFC 49.
The 3-0 judgment against Google included the following text:
"An ordinary and reasonable user would conclude from these circumstances that it was Google who was displaying the sponsored link in collocation with the sponsor's URL in response to the user's search. Even if all these circumstances would not be apparent to ordinary and reasonable users, so that Google could not be "seen" by them to be more than a mere conduit, these circumstances show that Google is, in fact, much more than a mere conduit. ... Critical to this conclusion is the fact that the sponsored link is displayed on the screen in response to a user's query which is made by the entry of selected key words. Thus, the user asks a question of Google and obtains Google's response. Several features of the overall process indicate that Google engages in misleading conduct. ...
Google supplies its advertising customers with the ability to select keywords which are expected to be used by persons making enquiries through Google's search engine. The ability of advertisers to select "broad match" keywords enables them to trigger sponsored links through Google's search engine based on known associations which are determined by Google's proprietary algorithm. Although the keywords are selected by the advertiser, perhaps with input from Google, what is critical to the process is the triggering of the link by Google using its algorithms. That is a further reason to conclude that it is Google's conduct as a principal, not merely as a conduit, which is involved in each of the four instances that form the subject matter of this appeal."
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This website has some useful links and references: http://www.epiphanysolutions.co.uk/article-index/rights-and-laws-of-the-internet/