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Google, FTC Settlement Can Face Consumer Group Challenge

A public interest group won the right to oppose a $22.5 million consumer lawsuit settlement between the U.S. Federal Trade Commission and Google Inc. (GOOG) over a privacy breach of Apple Inc. (AAPL)’s Safari browser.

U.S. District Judge Susan Illston in San Francisco last night gave attorneys for Consumer Watchdog until Sept. 21 to file a brief opposing the settlement, which was announced Aug. 9 needs court approval.

Consumer Watchdog, a Santa Monica, California-based advocacy group, opposes the agreement because it didn’t include an admission of wrongdoing by Google, echoing a dissenting view on the deal by FTC Commissioner Thomas Rosch. The group has frequently criticized privacy practices of Google and Facebook Inc.

“Google executives want to buy their way out of trouble with what for them is pocket change and then deny doing anything wrong,” John M. Simpson, Consumer Watchdog’s privacy project director, said in a statement.

The FTC alleged that Mountain View, California-based Google deceived consumers and violated terms of a consent decree signed with the commission last year when it bypassed Apple’s software’s privacy settings to plant so-called cookies on Safari that tracked users’ Internet browsing. The $22.5 million fine was the largest the agency had ever levied.

By law, the court must review whether the settlement is fair, reasonable, adequate and consistent with public policy.

Illston said she’ll decide whether to hold a hearing on Consumer Watchdog’s request after receiving all the legal papers.

‘No Basis’

“We are confident that there is no basis for this challenge,” said Nadja Blagojevic, a Google spokeswoman.

Claudia Bourne Farrell, an FTC spokeswoman, declined to comment. Both the FTC and Google filed motions with the court taking no position on Consumer Watchdog’s request to oppose the settlement.

Google, operator of the world’s largest Internet search engine, has drawn regulatory scrutiny and pressure from consumer advocates for the way it handles personal information. The company’s consent decree with the FTC settled allegations that it used deceptive tactics and violated its own privacy policies in introducing the Buzz social-networking service in 2010.

The question of whether judges should accept settlements where companies deny liability is now an issue in two other cases, Consumer Watchdog said in a court filing Aug. 21.

Last year, U.S. District Judge Jed Rakoff in Manhattan rejected a proposed stipulated order between the Securities and Exchange Commission and Citigroup Inc. because the bank didn’t admit or deny of the allegations in the complaint. An appeals court said Rakoff had minimal authority to second-guess the SEC, withholding a final ruling until it hears full arguments on the issue.

New Jersey

In another FTC case, against a New Jersey-based company called Circa Direct LLC, which involves promoters of acai berry- based weight-loss products, the district court asked the agency to submit briefs on whether the lack of an admission of liability affects the court’s public interest analysis, Consumer Watchdog said in the filing.

Consumer Watchdog, which was founded by activist Harvey Rosenfield, represents consumer interests in areas including health care reform, insurance rates, energy policy, legal rights and political accountability, according to its website. The group started its privacy project four years ago, when it received a $100,000 grant from the Rose Foundation to develop awareness about Google’s data collection and privacy practices, according to the foundation’s website.

The Rose Foundation, based in Oakland, California, was founded by Jill Ratner and Tim Little in 1992 to promote grassroots initiatives supporting the environment, consumer protection and community action programs, according to its website.

The case is U.S. v. Google Inc., 3:12-cv-04177, U.S. District Court, Northern District of California (San Francisco.)

To contact the reporter on this story: Sara Forden in Washington at sforden@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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