Google is paying a $22.5 millionfine to settle the latest regulatory case questioning the Internet searchleader's respect for people's privacy and the integrity of its internalcontrols.
The penalty announced Thursday by the Federal Trade Commission matches thefigure reported by The Associated Press and other media outlets last month.It's the most that the FTC has ever fined a company for a civil violation.
The rebuke resolves the FTC's allegations that Google Inc. duped millions ofWeb surfers who use Apple Inc.'s Safari browser.
Google had assured people that it wouldn't monitor their online activities, aslong as they didn't change the browser settings to permit the tracking.
Google broke that promise, according to the FTC, by creating a technologicalloophole that enabled the company's DoubleClick advertising network to shadowunwitting Safari users. That tracking gave DoubleClick a better handle on whatkinds of marketing pitches to show them.
The FTC concluded that the contradiction between Google's stealth tracking andits privacy assurances to Safari users violated a vow that the company made inanother settlement with the agency in October.
The latest settlement doesn't affect a separate FTC inquiry over whether Googlehas been abusing its dominant position in Internet search to highlight its ownservices over rivals and drive up online advertising prices. The settlementalso doesn't come with any admission from Google of wrongdoing.
The company has acknowledged that DoubleClick was tracking Safari users, butinsists the monitoring wasn't by design.
All Google wanted to do, according to the company, was create a way for Safariusers to press on a button to signal they recommended an ad. Google said itdidn't realize its tinkering altered Safari's automatic privacy settings in away that allowed for broader surveillance.
After the circumvention was publicized in February by a graduate student atStanford University, Google stopped the tracking on Safari. The company says itnever collected any personal information.
"We set the highest standards of privacy and security for our users,"Google said Thursday.
Google's actions, though, have cast doubts about the sincerity of itscommitment.
The Safari intrusion is the latest privacy stumble at Google, whose dominantInternet search engine and popular email service provide valuable peepholesinto people's minds.
In 2010, Google set up a social networking service called Buzz that exposedpeople's email contacts. Following an FTC investigation, Google agreed to 20years of oversight and a pledge not to mislead consumers about privacy issues.That's the pledge that the FTC says Google broke with Safari.
Google also got in trouble for collecting personal data transmitted overunprotected Wi-Fi networks as Google cars cruised neighborhoods around theworld taking pictures for the company's online mapping service.
The FTC didn't take action against Google for scooping up the Wi-Fi data,although the Federal Communications Commission fined the company $25,000earlier this year for impeding its investigation into the matter.
As it did with the secret tracking on Safari, Google has framed those privacybreaches as inadvertent slips.
That defense is wearing thin, according to David Vladeck, the director of theFTC's bureau of consumer protection.
"In some ways, as a regulator, it's hard to know which answer is worst: 'Ididn't know' or 'I did it deliberately.' Both are bad," Vladeck toldreporters on a Thursday conference call.
The FTC hopes the fine will force Google to pay better attention to itspractices.
"It's a big company," Vladeck said. "It's grown very quickly,but the social contract is if you are going to hold on to people's most privatedata, you have got to do a better job of honoring your privacycommitment."
Those terse remarks underscore Google's increasingly tense relationship withregulators around the world. Both the FTC and the European Commission areengaged in broad antitrust investigations of Google. The company, which isbased in Mountain View, California, has submitted a list of concessions in anattempt to settle Europe's probe, while the FTC's inquiry remains open.
Although the $22.5 million fine is a record for the FTC, it won't leave much ofa financial dent at Google. The company had $43 billion in cash at the end ofJune and generates $22.5 million in revenue roughly every four hours.
"This record fine will send a signal to a lot of Internet companies, butthere's still some question whether the FTC has the authority and resources torein in an entity as big and powerful as Google," said Carl Tobias, aRichmond University law professor who followed the Safari case.
Bad publicity may be the bigger blow for Google, which takes so much pride inits scruples that it has adopted "Don't Be Evil" as its corporatemotto.
"This has to sting. They don't want to lose too much goodwill," saidJustin Brookman, director of consumer privacy for the Center for Democracy& Technology.
The FTC's willingness to settle with Google without an admission of wrongdoingtroubled one of the agency's own commissioners, J. Thomas Rosch. He votedagainst the settlement because he didn't believe the agreement was in thepublic interest without Google admitting liability.
But the FTC's four other commissioners voted in favor of the settlement.
"We don't get anything out of an admission other than a goodheadline," Vladeck said. "It is not of any practical value tous."
The fine surpasses a nearly $19 million penalty that the FTC slapped on atelemarketer accused of duping people into believing they were donating tocharities.
Without providing specifics, the FTC said the Google fine represents severaltimes more than what Google made from the targeted ads that it distributedthrough Safari.
Consumer Watchdog, a California group that has emerged among Google's moststrident critics, said it may challenge the settlement unless Google admits itbroke the privacy promise made with the Buzz settlement.
"The commission has allowed Google to buy its way out of trouble for anamount that probably is less than the company spends on lunches for itsemployees and with no admission it did anything wrong," Consumer Watchdogcomplained.
News of the FTC's fine didn't faze investors as Google shares added 12 cents toclose Thursday at $642.35. Although it was modest, the gain was still enough toboost Google's market value by about $39 million, nearly twice the amount ofthe fine.