San Francisco - Google is paying a $22.5m fine to settle the
latest regulatory case questioning the internet search leader's respect for
people's privacy and the integrity of its internal controls.
The penalty announced on Thursday by the Federal Trade Commission
matches the figure reported by The Associated Press and other media outlets
last month. It's the most that the FTC has ever fined a company for a civil
The rebuke resolves the FTC's allegations that Google duped
millions of Web surfers who use Apple's Safari browser.
Google had assured people that it wouldn't monitor their
online activities, as long as they didn't change the browser settings to permit
Google broke that promise, according to the FTC, by creating
a technological loophole that enabled the company's DoubleClick advertising
network to shadow unwitting Safari users. That tracking gave DoubleClick a
better handle on what kinds of marketing pitches to show them.
The FTC concluded that the contradiction between Google's
stealth tracking and its privacy assurances to Safari users violated a vow that
the company made in another settlement with the agency in October.
The latest settlement doesn't affect a separate FTC inquiry
over whether Google has been abusing its dominant position in internet search
to highlight its own services over rivals and drive up online advertising
prices. The settlement also doesn't come with any admission from Google of
The company has acknowledged that DoubleClick was tracking
Safari users, but insists the monitoring wasn't by design.
All Google wanted to do, according to the company, was
create a way for Safari users to press on a button to signal they recommended
an ad. Google said it didn't realise its tinkering altered Safari's automatic
privacy settings in a way that allowed for broader surveillance.
After the circumvention was publicised in February by a
graduate student at Stanford University, Google stopped the tracking on Safari.
The company says it never collected any personal information.
"We set the highest standards of privacy and security
for our users," Google said on Thursday.
Google's actions, though, have cast doubts about the sincerity
of its commitment.
The Safari intrusion is the latest privacy stumble at
Google, whose dominant internet search engine and popular email service provide
valuable peepholes into people's minds.
In 2010, Google set up a social networking service called
Buzz that exposed people's email contacts. Following an FTC investigation,
Google agreed to 20 years of oversight and a pledge not to mislead consumers
about privacy issues.
That's the pledge that the FTC says Google broke with
Google also got in trouble for collecting personal data
transmitted over unprotected Wi-Fi networks as Google cars cruised
neighbourhoods around the world taking pictures for the company's online
The FTC didn't take action against Google for scooping up
the Wi-Fi data, although the Federal Communications Commission fined the
company $25 000 earlier this year for impeding its investigation into the
As it did with the secret tracking on Safari, Google has
framed those privacy breaches as inadvertent slips.
That defense is wearing thin, according to David Vladeck,
the director of the FTC's bureau of consumer protection.
"In some ways, as a regulator, it's hard to know which
answer is worst: 'I didn't know' or 'I did it deliberately.' Both are
bad," Vladeck told reporters on a Thursday conference call.
The FTC hopes the fine will force Google to pay better
attention to its practices.
"It's a big company," Vladeck said. "It's
grown very quickly, but the social contract is if you are going to hold on to
people's most private data, you have got to do a better job of honoring your
Those terse remarks underscore Google's increasingly tense
relationship with regulators around the world. Both the FTC and the European
Commission are engaged in broad antitrust investigations of Google. The
company, which is based in Mountain View, California, has submitted a list of
concessions in an attempt to settle Europe's probe, while the FTC's inquiry
Although the $22.5m fine is a record for the FTC, it won't
leave much of a financial dent at Google. The company had $43bn in cash at the
end of June and generates $22.5m in revenue roughly every four hours.
"This record fine will send a signal to a lot of
internet companies, but there's still some question whether the FTC has the
authority and resources to rein in an entity as big and powerful as
Google," said Carl Tobias, a Richmond University law professor who
followed the Safari case.
Bad publicity may be the bigger blow for Google, which takes
so much pride in its scruples that it has adopted "Don't Be Evil" as
its corporate motto.
"This has to sting. They don't want to lose too much
goodwill," said Justin Brookman, director of consumer privacy for the
Center for Democracy & Technology.
The FTC's willingness to settle with Google without an
admission of wrongdoing troubled one of the agency's own commissioners, J.
Thomas Rosch. He voted against the settlement because he didn't believe the
agreement was in the public interest without Google admitting liability.
But the FTC's four other commissioners voted in favor of the
"We don't get anything out of an admission other than a
good headline," Vladeck said. "It is not of any practical value to
The fine surpasses a nearly $19m penalty that the FTC
slapped on a telemarketer accused of duping people into believing they were
donating to charities.
Without providing specifics, the FTC said the Google fine
represents several times more than what Google made from the targeted ads that
it distributed through Safari.
Consumer Watchdog, a California group that has emerged among
Google's most strident critics, said it may challenge the settlement unless
Google admits it broke the privacy promise made with the Buzz settlement.
"The commission has allowed Google to buy its way out
of trouble for an amount that probably is less than the company spends on lunches
for its employees and with no admission it did anything wrong," Consumer
News of the FTC's fine didn't faze investors as Google
shares added 12 cents to close Thursday at $642.35. Although it was modest, the
gain was still enough to boost Google's market value by about $39m, nearly
twice the amount of the fine.
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