Antitrust Law Daily Wrap Up, PRIVACY—NDCal: Google Agrees to Injunction, $22.5 Million Civil Penalty to Resolve Contempt Charges, (Nov 19, 2012)

By E. Darius Sturmer, J.D.

Google, Inc. will pay a $22.5 million civil penalty to the U.S. Department of Justice as part of a settlement of the government’s charges that the technology giant violated an October 2011 FTC consent order resolving the Commission’s claims that Google violated Gmail users’ privacy and acted deceptively when it introduced its social networking service Google Buzz in 2010. The federal district court in San Francisco found the settlement to be fair, adequate, and reasonable (U.S. v. Google, Inc., November 16, 2012, Illston, S.).

The court issued its approval of the consent decree over the objections of amicus curiae Consumer Watchdog, which had contended that the agreed-upon injunctive relief was inadequate, that the civil penalty was too small, and that the agreement should not have allowed Google to avoid admitting liability.

The 2011 FTC consent order had resolved the agency’s accusations that the company used Gmail users’ private information despite telling those users it would only use it for Gmail services, the court noted. In that action, the Commission had further alleged that Google misrepresented to Gmail users that it would not automatically enroll them in the Buzz network and that they could control what information would be public on their profiles.

Among its terms, the final consent order prohibited Google from future misrepresentations regarding its collection and use of private information and its customers’ control over that information. The government’s August 2012 contempt complaint alleges that Google violated this provision through the placing of cookies on users’ computers without their knowledge. It alleges also that Google’s conduct ran afoul of a second part of the consent order barring misrepresentations about its membership and compliance with privacy or security programs by ignoring a Network Advertising Initiative code of conduct requirement to post notices specifying its data collection processes.

In addition to the assessment of the civil penalty, the settlement agreement resolving these contempt charges requires that Google, until February 15, 2014, “maintain systems configured to instruct Safari-brand web browsers to expire any DoubleClick.net cookie placed by Defendant through February 15, 2012 if those systems encounter such a cookie, with the exception of the DoubleClick opt-out cookie.” It additionally obligates Google to submit certain compliance verification.

In its order approving the settlement between the parties, the court cast aside the various objections of Consumer Watchdog.

The group’s call for further injunctive relief envisioned an injunction that was “unnecessary and duplicative,” in the court’s view. The court deferred to the mutual conclusion of the parties that Consumer Watchdog’s concerns that the injunction allowed Google to continue to profit from information gathered from the wrongfully-placed cookies described a matter that had been considered and dismissed in negotiating the settlement. Google attested that it was unlikely to use the information it had gathered from the Safari cookies. The $22.5 million civil penalty was not unreasonable, the court added, noting that the case did not contain allegations of large amounts of consumer loss or Google profit. Finally, the court rejected Consumer Watchdog’s argument that Google’s denial of liability contravened the public interest by explaining that the group’s position—that a consent decree requires an admission of liability—is contradicted by legal history and precedent.

The case is No. CV 12-04177 SI.

Leo P. Cunningham (Wilson Sonsini Goodrich & Rosati) for Google Inc.

Cases: ConsumerProtection Privacy FederalTradeCommissionNews CaliforniaNews