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Google to pay $22.5 million fine for privacy breach

A proposed $22.5m fine to penalise Google for alleged privacy breach is close to winning court approval.

Judge Susan Illston for the US District announced to lawyers on Friday’s court hearing in San Francisco that she is leaning toward approving the fine, a cornerstone of a settlement reached three months ago between Google and the Federal Trade Commission.

The reprimand is an attempt to resolve the allegations that Google had duped millions of users with Safari browsers into believing that searches and activities were not traced by the company so long as they kept the browsers’ privacy settings.  

Assurance was put up on Google’s website earlier in the year, the same period that saw Google inserting computer coding that bypassed Safari’s automatic settings. This would allow the company to view the online activity of users.

The FTC concluded that this action contradicts Google’s stealth tracking and its privacy assurances to Safari users, stating it violated a vow made in another settlement with the agency the previous year.

Google had promised not to mislead people about its privacy practices.

The FTC have hailed their actions as proof of its commitment to protect the public interest, yet a consumer rights groups have criticised the settlement as an instance of ineffectual regulation.

The group, Consumer Watchdog, is attempting to bring more attention to the issue as the FTC is set to finalise its separate investigation into complaints of Google’s monopoly and stifling of competition, notably by raising online ad prices and highlighting its own services in its influential search engine.

Gary Reback, Consumer Watchdog attorney, is eager to pressure the FTC to take Google to court in the antitrust investigation instead of negotiating a settlement known as a consent decree, as it did in the Safari privacy flap. He said in an interview after Friday's court hearing that a consent decree "is not a good way to police Google".

Reback is also representing some of the Internet companies that have filed complaints against Google in the antitrust case.

FTC chairman Jon Leibowitz has said he expects regulators to decide whether to sue, settle or simply close the antitrust investigation by the end of this year.

During the Safari case, Consumer Watchdog argued the fine amounts to be loose change for a company like Google, which generates about $22.5m in revenue every four hours. In legal briefs, Reback asserted that Google should be fined at least $3bn, a steep fine which mirrors the number of people potentially affected.

The FTC estimates around 190 million people use Safari to browse the Web on computers, smartphones and tablets made by Google's rival Apple. But the agency said the impact of Google's breach was relatively small, estimating the company picked up about $4m in revenue from the intrusion.

The FTC deems the fine to be a milestone as the Google case is the largest the agency has ever levied for a civil violation. It estimates Google generated no more than $4m in revenue from its alleged misconduct.

Consumer Watchdog also contended the settlement lacked pull because it allows Google to deny any liability for its conduct.

J Thomas Rosch , FTC Commissioner, echoes these concerns, voting against the Google settlement.

Leibowitz and three other FTC commissioners voted for the settlement anyway because they believe it will deter similar breaches in the future.

Google insists it didn't intentionally bypass Safari's default settings.

Consumer Watchdog blasted the settlement for allowing Google to retain the data that it got from Safari users without authorisation.

Illston has shrugged off the objections about the fine’s magnitude and Google's denial of liability, probing deeper into Google's retention of the Safari browser data and raising the possibility that she could require revisions to that portion of the settlement. She has not yet disclosed when she intends to issue a ruling.

Analysing Web surfing data helps Google gain a better understanding of people's preferences so it can customise online ads to appeal to different tastes.

David Kramer, Google lawyer, has told Illston that the data gathered from Safari browsers during the period covered by the settlement would be too stale to be of practical use to the company's advertising network.

He also maintained that much of the data transmitted to Google would have been sent even without the unauthorised insertion of additional computer coding.

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