August 10, 2012
By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Google Pays $22.5 Million to Settle Consumer Privacy Case

Internet search giant Google yesterday agreed to pay a record $22.5 million in civil penalties to settle U.S. Federal Trade Commission charges that it misrepresented to users of Apple's Safari Internet browser that it would not place tracking cookies or serve targeted ads to those users.

The settlement is the largest penalty the agency has ever obtained for a violation of a commission order. In addition to the civil penalty, the order also requires Google to disable all the tracking cookies it had said it would not place on consumers' computers.

"The record-setting penalty in this matter sends a clear message to all companies under an FTC privacy order," said Jon Leibowitz, chairman of the FTC. "No matter how big or small, all companies must abide by FTC orders against them and keep their privacy promises to consumers, or they will end up paying many times what it would have cost to comply in the first place."

The settlement, the commission statement said, is in the public's interest.

But not everyone on the five-member FTC panel was as enthusiastic. Commissioner J. Thomas Rosch, the lone dissenter, objected on the grounds that there was no admission of guilt on Google's part. 'The complaint is not a finding or ruling that the defendant has actually violated the law. This consent order is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated," the FTC said in the statement.

Rosch also maintained that the amount is a mere pittance for Google, noting that $22.5 million represents a small fraction of Google's revenue, which some have estimated at about $32 million per day. The company annually generates billions of dollars in revenue from selling online advertising, including the delivery of targeted ads based on information collected by cookies about the user's Web-browsing activity.

In its complaint, the FTC charged that for several months in 2011 and 2012, Google placed advertising tracking cookies on the computers of Safari users who visited sites within Google's DoubleClick advertising network despite assurances that it would not do so. The complaint alleged that Google placed the cookies on consumers' computers, in many cases by circumventing the Safari browser's default setting that automatically blocked cookies.

The FTC charged that Google violated a settlement it reached with the agency in October 2011, which barred Google from misrepresenting the extent to which consumers could exercise control over the collection of their information. The earlier settlement resolved FTC charges that Google used deceptive tactics and violated its privacy promises when it launched its social network, Google Buzz.

For its part, Google said it takes consumer privacy issues seriously and would remove the advertising cookies. A Google spokesperson, in an emailed statement, said the company "set the highest standards of privacy and security for our users. The FTC is focused on a 2009 help center page published more than two years before our consent decree, and a year before Apple changed its cookie-handling policy. We have now changed that page and taken steps to remove the ad cookies, which collected no personal information, from Apple's browsers."