Google Inc. (GOOG) Thursday agreed to pay $22.5 million in civil penalty to settle Federal Trade Commission charges that it failed to maintain privacy assurances to users of Apple Inc.'s Safari Internet Browser.
As per the FTC charges, Google misled Safari users into believing that it would not encroach on their privacy by placing tracking cookies or serve targeted ads, and as a result, violated an earlier privacy settlement between the company and the FTC. Google's $22.5 million penalty is the largest ever for violation of a Commission order.
In addition to the penalty, the FTC said it is incumbent upon Google to disable all the tracking cookies it had said it would not place on consumers' computers.
"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.
Leibowitz further said, "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."
Cookies are small pieces of computer text used to collect information from computers and can be used to serve targeted ads to consumers. By placing a tracking cookie, an advertising network can collect information about the user's browsing activities and use that data to serve online ads targeted to the user's interests. Google on its part, generates huge revenues from selling online advertising services.
As per the FTC complaint, Google, over many months in 2011 and 2012, placed a certain advertising tracking cookie on the computers of Safari users who visited sites within Google's DoubleClick advertising network. Although, Safari users were assured they would automatically be opted out of such tracking owing to the default settings of the Safari browser, in many cases, its cookies circumvented that process.
Google also represented itself a member of a group called the Network Advertising Initiative, which requires members to disclose their data collection and use practices.
The FTC charged that by its wrong practices towards Safari users, Google violated a settlement reached with the agency in October 2011, which, among other things, barred the company from misrepresenting the leverage consumers have in exercising control over collection of their data. The earlier settlement settled FTC charges that Google used unacceptable tactics and violated its privacy promises when it launched Google Buzz, its social network.
GOOG closed Thursday at $642.35, up 0.02%, on a volume of over 1.0 million shares on the Nasdaq.
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