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Judge OKs $22.5 Million FTC Fine on Google

Judge OKs $22.5 Million FTC Fine on Google
November 20, 2012 11:14AM

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"I think this is too small to change behavior," said analyst Rob Enderle of the FTC's $22.5 million privacy fine against Google. "Amounts like this are easily fit in the cost of doing business for a company of this size. It likely needs to be two magnitudes bigger to convince the company to change behavior." A judge has OK'd the fine against Google.

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A federal judge has agreed to a $22.5 million settlement in the Federal Trade Commission's case against Google for tinkering with Apple's Safari browser to make it easier to track users' activity via mobile ads.

The fine is the toughest ever leveled by the government watchdog agency, but not the first slap against the Mountain View, Calif-based technology giant.

The two sides agreed to the settlement in August, after an investigation into code that allowed Google to bypass Apple's privacy settings on its browser for the iPhone and iPad. This was accomplished by adding +1 Google -- recommendations to ads produced by Google's DoubleClick ad agency, which cleverly allowed Safari to accept cookies, snippets of data. The code was discovered by a Stanford University researcher who reported his findings to The Wall Street Journal.

'News to Us'

Google said it didn't know its code was having that effect on computers and immediately discontinued the code after the Journal's report.

Members of Congress demanded an investigation, and the FTC said Google had violated an October 2011 settlement in which it promised to behave itself on privacy issues. The tracking code was a misrepresentation to consumers regarding Google's privacy policies, the FTC said.

""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 fine is a huge jump from the $25,000 fine leveled by the FTC just last April because of personal data obtained by the company's Street View cars, which capture images for Google Maps, obtained from Wi-Fi routers.

But some say the fine is still too paltry for Google to feel it. Google earns $22.5 million about every four hours, according to an estimate by the group Consumer Watchdog.

Europe Is Tougher

"I think this is too small to change behavior," said consultant Rob Enderle of the Enderle Group. "Amounts like this are easily fit in the cost of doing business for a company of this size. It likely needs to be two magnitudes bigger to convince the company to change behavior. Fines this low are little more than a small annoyance."

Enderle noted that it took a fine of $1.44 billion against software giant Microsoft leveled by the European Union before the company changed its licensing practices.

"The EU has been far more effective than the U.S. of late addressing bad corporate behavior," Enderle told us.

In addition to the fine, the order also requires Google to disable all the tracking cookies it had said it would not place on consumers' computers.

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