Consumer Watchdog challenges Google-FTC privacy settlement

The nonprofit consumer advocacy group objects to Google being allowed to deny guilt

Consumer Watchdog, a nonprofit consumer advocacy group, is dialing up its criticism of the proposed privacy settlement between the U.S. Federal Trade Commission and Google.

The group, which blasted the settlement when it was announced two weeks ago, has now filed a motion with the U.S. District Court for the Northern District of California, San Francisco Division, which is tasked with approving or rejecting the proposed deal.

For the motion, Consumer Watchdog has enlisted the help of well-known attorney Gary Reback, whose work had a big influence in the U.S. Justice Department's decision to sue Microsoft in the late 1990s in what became a landmark antitrust case.

Consumer Watchdog maintains that the court shouldn't approve the settlement because it allows Google to deny any wrongdoing, an objection that is also shared by FTC Commissioner J. Thomas Rosch, who voted against the agreement, arguing that without an admission of guilt from Google the settlement isn't in the public interest.

The motion, filed by Reback and his Carr & Ferrell colleague Robert Yorio on behalf of the group, asks Judge Susan Illston to grant Consumer Watchdog friend-of-the-court status and allow it to file briefs opposing the settlement. Consumer Watchdog also wants the judge to hold a hearing on the proposed settlement and allow it to participate.

"We ask that the Court take the opportunity to establish a briefing schedule commensurate with the importance of this case. The parties provided no briefing to the Court at the time they filed these motions. Other courts, in similar circumstances, have required the parties -- the FTC, in particular -- to fully brief the numerous important issues before the Court, including, principally, how the 'public interest' standard is satisfied by the FTC's actions," the motion reads.

"We also respectfully suggest that a hearing might assist the Court in deciding whether to enter the proposed consent decree," the motion adds.

The proposed settlement imposes a US$22.5 million fine on Google, which is the largest civil penalty ever secured by the FTC for a violation of one of its orders, although it is a tiny fraction of Google's almost $38 billion in 2011 revenue.

However, despite the historic fine, the proposed settlement also states that Google "denies any violation of the FTC Order, any and all liability for the claims set forth in the Complaint, and all material allegations of the Complaint save for those regarding jurisdiction and venue.

In its complaint, the FTC alleged that Google falsely told Safari users that it wouldn't place tracking cookies on their devices or serve them targeted ads.

The FTC said that with this misrepresentation, Google violated an existing privacy settlement it had reached with the agency related to alleged privacy breaches in the Google Buzz social network.

When the proposed settlement was announced, Google said that the FTC's allegations were based "on a 2009 help center page published more than two years before our consent decree, and a year before Apple changed its cookie-handling policy." Google has now changed that page and "taken steps to remove the ad cookies, which collected no personal information, from Apple's browsers," Google said in a statement then.

Asked for comment about Consumer Watchdog's motion, a Google spokeswoman said via email: "We're confident that there is no basis for this challenge." An FTC spokeswoman said the agency is reviewing the motion.

John Simpson, director of the privacy project at Consumer Watchdog, said the proposed settlement lets Google "buy its way out of trouble" and get away with making no admission of wrongdoing. "Corporations need to be held accountable when they willfully violate a consent agreement," he said in a statement.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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