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The FTC’s paltry penalty against Google is a meat cleaver to the head, not a slap on the wrist

By Simon Davies

The US Federal Trade Commission (FTC) yesterday levied a record $22.5 million fine against Google over what it identified as manipulative and deceptive advertising practices.

Google should be deeply worried about this penalty, most of all because of the FTC’s blatant leniency.

The charges against Google are grave by any standard. The FTC claimed that the company misrepresented the privacy protections available to users of Apple’s Safari browser, resulting in millions of people being exposed to ads by Google’s DoubleClick. These actions it was claimed, were intentional.

In the current climate of legal hostility against Google no action could have been better calculated to bring maximum grief to the company.

In bringing this paltry penalty the FTC has either gone yet again to water or it is playing a very canny and vicious game against the company. In the current climate of legal hostility against Google no action could have been better calculated to bring maximum grief to the company.

Considering Google is being swept globally into a morass of privacy lawsuits, antitrust and competition challenges the imposition of a symbolic penalty by a regulator-of-last-resort will have the effect of generating suspicion and anger amongst those who are already concerned that Google has manipulated its way into market immunity.

It will not help Google that the penalty for serious charges of misrepresentation is around the equivalent of a bottle of medium quality wine for the average working car salesman. Google announced a record cash reserve for the second quarter of this year of $43 billion.

In Europe, where Google has engaged in particularly aggressive combat with authorities, news of the FTC decision is being greeted with disbelief. The European Union is accustomed to handing out substantial penalties for non-compliance that reach into the billions.

Google has been playing a dangerous game of brinkmanship with Europe, venturing even to the extent of arrogance with French privacy authorities. If European regulators sense that Google cannot be reined in by US authorities it is likely they will take a much tougher stand in their own jurisdiction.

Google knows that Europe is serious about protecting privacy and data protection but has chosen to take a combative and at times even obfuscatory approach. It is playing with fire. Article 79 of the European Commission’s proposals for reform of the EU data protection framework allow for penalties of up to two percent of a company’s global revenue for serious privacy violations. In Google’s case that would be $800 million.

Google may have scraped a first-round negotiated antitrust settlement with Europe, but a litany of privacy controversies including Streetview, the WiFi scandal and now the Safari deception does not bode well for the company.