Google $22.5M Settlement With FTC Over Privacy Criticized by Industry Group

A group promoting competitive innovation on the Internet has criticized the FTC’s “headline-grabbing settlement” for $22.5 million with Google as a move that “will chill Internet innovation.”

The reaction from the Competitive Enterprise Institute followed the Federal Trade Commission’s Aug. 9 announcement that Google had agreed to settle with the agency over charges that it misrepresented to users of Apple’s Safari Web browser that it would not place tracking “cookies” or serve targeted ads to those users. The FTC said it took action after Google violated a previous settlement with the agency over the same issue.

While privacy advocacy groups applauded the decision as a strong signal that consumer online privacy should be protected, the decision sets “a dangerously overbroad precedent that will chill Internet innovation and hurt online startups,” the Institute said in a statement.

“Google’s only mistake here was failing to realize a software tweak by Apple rendered one of Google’s help pages inaccurate,” said Ryan Radia, associate director of the Center for Technology & Innovation at the Institute. “There is no evidence that any users were … harmed by this inaccurate help page, nor does the FTC allege that Google knew or should have known that its help page was wrong.”

In announcing the settlement, which was originally revealed in July, the FTC said it should send a clear signal “to make sure companies keep their privacy promises to consumers.”

“No matter how big or small, all companies must abide by FTC orders against them … or they will end up paying many times what it would have cost to comply in the first place,” said Jon Leibowitz, chairman of the FTC.

Not surprisingly, consumer privacy groups took a much different take on the issue than the Competitive Enterprise Institute.

“This action demonstrates the FTC is a champion for consumer privacy rights,” said Justin Brookman, the director of consumer privacy issues at the Center for Democracy & Technology. “The CDT has urged the FTC to use the full weight of its enforcement authority to protect privacy and the agency has absolutely stepped up to that challenge.”

The FTC charged that for several months in 2011 and 2012, Google placed a certain advertising tracking cookie on the computers of Safari users who visited sites within Google’s DoubleClick advertising network. It charged that Google placed the cookies on consumers’ computers in many cases by circumventing the Safari browser’s default cookie-blocking setting.

Placing the cookies on the computers of Safari browsers violated the terms of an October 2011 settlement between Google and the FTC over deceptive practices related to the launch of Google Buzz, the late unlamented original attempt by Google to compete with Facebook in the social media space. Google later abandoned Buzz and went to work on its successor Google +, which launched in June 2011.