Google Judge Accepts $22.5 Million FTC Privacy Settlement

Google Inc.’s $22.5 million agreement with the U.S. Federal Trade Commission to settle claims the company improperly planted cookies on Apple Inc. (AAPL)’s Safari Internet browser was approved by a federal judge.

U.S. District Judge Susan Illston in San Francisco found arguments from a consumer group that the settlement was inadequate unpersuasive and accepted the agreement.

The court “finds that the proposed order is both procedurally and substantively fair, adequate and reasonable,” Illston wrote in her order issued after yesterday’s hearing.

Under terms of the settlement, in addition to paying the fine, Google agreed to disable all the tracking cookies it had placed on the computers of Safari users and ensure all are gone by February 2014. Google denied wrongdoing, according to filings in federal court in San Francisco. When the breach was exposed in February, Google said that it “didn’t anticipate this would happen.”

Advocacy group Consumer Watchdog opposed the accord at a court hearing yesterday, saying it let Google off too easily. The group also suggested that the FTC’s separate antitrust investigation of the world’s largest search engine company may lack teeth.

“It implicates the procedure that will be used to resolve the antitrust case,” Gary Reback, an attorney for Consumer Watchdog, said in an interview after the hearing. “A consent decree will be weak, it won’t really make Google do anything.”

FTC Probe

The FTC has been investigating whether Google is abusing its dominance of the Internet for almost 20 months, and the agency is prepared to sue if the Mountain View, California-based company fails to make an acceptable proposal, two people familiar with the matter said last week.

The record $22.5 million fine for the Safari breach is the FTC’s first for an alleged violation of Internet privacy. Google deceived consumers and violated terms of a 2011 consent decree when it bypassed Apple software’s privacy settings and planted cookies on Safari, which allowed it to track users Internet browsing behavior, the FTC alleged.

Claudia Bourne Farrell, a spokeswoman for the FTC, didn’t immediately respond today to an e-mail seeking comment on the judge’s decision.

“We’re glad the court agreed there was no merit to this challenge,” Niki Fenwick, a spokeswoman for Google, said in an e-mail.

Software cookies are files residing on computers that help websites and browsers identify users.

Settings Overridden

Santa Monica, California-based Consumer Watchdog said the cookie settlement allows Google to keep and use the data it collected, thus letting the company continue to profit from its misconduct. Google collected data from as many as 190 million users whose browsers’ privacy settings were overridden by the cookies, the group said in court filings.

The group also faulted the settlement because it doesn’t include an admission of wrongdoing by Google.

David Kramer, Google’s attorney, told Illston that Consumer Watchdog’s concerns are “neither realistic or practical” because the company doesn’t retain cookie information identifying users and their Internet addresses change over time.

Adrienne Fowler, a Justice Department attorney, told Illston that Google garnered very little data on users and most of it came from other legal methods not at issue in the FTC case.

“Any data collected would really be a drop in the ocean,” Fowler said.

The company signed a consent decree with the FTC last year to settle allegations that it used deceptive tactics and violated its own privacy policies in introducing the Buzz social-networking service in 2010.

The 20-year agreement bars Google from misrepresenting how it handles user information and requires the company to follow policies that protect consumer data in new products.

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

To contact the reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Karen Gullo in San Francisco at kgullo@bloomberg.net

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

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