FTC: $22.5 Million Penalty Sends Message To Google

Thu, Aug 9, 2012 at 1:54 pm

    Google agreed to pay a $22.5 million penalty — the largest ever levied by the Federal Trade Commission — to settle charges that it failed to honor the privacy settings of millions of people who use Apple’s Safari Web browser, regulators said Thursday.

    While the settlement had been widely reported prior to Thursday’s announcement, the FTC used the opportunity to lay out its thinking on the case and defend itself against critics — including one of its commissioners — who say the fine should have been heftier.

    The FTC alleges that Google misled Safari users into believing that it would not track their online activities and target advertisements to them. When it did so anyway, Google violated a 20-year order it signed last year involving privacy breaches on Buzz, the company’s now-defunct social networking application, the government said.

    In a call with reporters, FTC officials said the agency did not want to impose a fine that would “cripple” a legitimate company. Instead, the FTC wanted to send a message to Google and others that it would not tolerate flagrant disregard for the settlements the agency negotiates.

    “We have Google under order for another 19 years, and I think this civil penalty order sends another message to Google that the FTC is not kidding around,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.

    But while some consumer privacy rights advocates cheered the settlement, others said it was inadequate, given Google’s size and its history of flouting the privacy promises it makes to consumers. Among the critics was FTC Commissioner J. Thomas Rosch, who said that allowing Google to settle without admitting wrongdoing was “inexplicable.”

    Consumer Watchdog, a nonprofit public interest group, voiced similar concerns and said it would oppose the settlement, which has to be approved by a federal judge.

    Google has blamed the Safari problems on a technical glitch. On Thursday, Google said in a statement that it has taken steps to remove the ad cookies, the computer code that tracks a user’s Web activities. The tracking cookies collected no personal information from Apple’s browsers, Google said.

    In a dissenting statement, Rosch said allowing Google to continue denying liability “in circumstances such as these is unprecedented.” While some may say the denial is justified by the historic penalty, the fine is a “de minimis amount of Google’s profit or revenues,” he wrote. The company collected $36.5 billion in ad fees last year.

    In response, the other four FTC commissioners said that “almost any penalty can be dismissed as insufficient” for a company of Google’s size. But the fine is substantial given that Google’s conduct was short-lived and did not yield significant revenue, they said.

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