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Google to pay Arizona $85 million over privacy concerns

Google's initial public offering is one that investors have long awaited.
Google's initial public offering is one that investors have long awaited.

By Howard Fischer
Capitol Media Services
PHOENIX -- Internet giant Google has agreed to pay $85 million to the state of Arizona to settle charges that it secretly invades the privacy of Arizonans.
In a settlement Tuesday, the company does not admit to claims by Attorney General Mark Brnovich that its practices of tracking and collecting information on users violates the Arizona Consumer Fraud Act. In fact, the agreement filed in Maricopa County Superior Court specifically says it is not an admission of wrongdoing or violations of state law.
But it does require that the bulk of the dollars to be spent on education, broadband and Internet privacy efforts -- the last of these being exactly the issue that resulted in the state's 2020 lawsuit against Google.
Brnovich, in a prepared statement, called the deal "historic,'' saying the deal represents the largest amount per capita that the company has paid in a privacy and consumer-fraud lawsuit of this kind.
There was no immediate comment from Google.
At the heart of the case is the claim by Brnovich that the company not only collects and stores location data but deliberately makes it difficult for those who use Android phones that operate on the Google-created operating system to know what information is being sent. Brnovich also argued that the company does not make it simple for people to turn off tracking and hides the fact that even if customers turn off location history that data is still transmitted.
But more than Android-powered phones are at issue.
Brnovich said Google also collects, stores and uses location data whenever people interact with Google apps and services. He contends consumers are not told they cannot prevent the collection of location information, even if they disable certain settings.
And what that's all about is money.
Google has acknowledged it has a business practice of selling information to advertisers who then can target users in specific locations. Brnovich said that in 2019, more than 80% of the company's revenues -- $135 billion of its $161 billion total -- were generated through advertising.
The problem with all that, Brnovich charged, is that the tactics the company uses to "surveil'' is users' locations are "willfully deceptive and unfair.'' And that, he said, violates the state's Consumer Fraud Act.
A company spokesman had told Capitol Media Services that the information the company gathers "helps us provide useful services when people interact with our products, like locally relevant search results.''
He also said there are ways for users to delete location history and web activity.
But Brnovich argued it's not that simple. He said the company makes it "exceedingly hard for users to understand what is going on with their location information, let alone opt-out of this morass.''
"Google makes it impractical if not impossible for users to meaningfully opt-out of Google's collection of location information, should users seek to do so,'' he charged.
He told Capitol Media Services when he filed the lawsuit that users should be concerned.
"This includes physical location, everything about where you're going, your doctor's office,'' he said. And what's worse, Brnovich said, is that the company effectively is lying to people about how they can stop that from happening.
"Even if a consumer or customer turns off their location, they've got their location history off, Google surreptitiously is collecting information through other settings, other apps, other web activity,'' he said.
Despite acknowledging many of the practices, attorneys for Google said in court filings none of that violates Arizona laws designed to protect consumers.
The heart of those statutes makes it illegal to engage in deceptive and unfair practices "in connection with'' the sale or advertisement of any merchandise.
The theory presented by attorneys for Google is that any fraud that may have occurred -- and they did not concede any did -- was not part of the process of consumers obtaining Google products but only occurred later, after the sale was made, when they set up accounts or used an app. In fact, they said users are not even required to set up an account, meaning there is no connection between the sale and the alleged deception.
In a pretrial hearing, Maricopa County Superior Court Judge Timothy Thomason said there was "some appeal'' to Google's argument. He said the consumer fraud act is intended primarily to address situations where people are misled while buying or leasing merchandise.
"Statements or omissions that occur after the sale or lease arguably have no impact on the consumer's purchasing decision,'' the judge said.
But Thomason refused the company's plea to dismiss the case, saying there is enough in the state's argument to suggests the actions of Google fall within what's prohibited by the state's consumer fraud law.
It starts with the fact that Google devices, like Pixel and Nexus phones, come pre-loaded with functions, including sensors and settings within them, which Google then uses to track consumers' locations. And the state argued that during the "bargaining process,'' when people were buying the devices, they weren't told about the tracking, "leading consumers to incorrectly believe that they could control when they could be tracked,'' the judge said.
But even those who do not buy Google phones are affected when people use Google services, like Google Maps, where people get a service like directions in exchange for giving the company their personal location data.
The judge was no more sympathetic to Google's argument that its acts did not violate Arizona law because it provides the apps free of charge.
He said nothing in the Consumer Fraud Act actually requires that there be a payment. Then there's the state's claim that the services really aren't "free.''
"They were 'sold' to users, despite ostensibly being 'free,' because there was an exchange of consideration in the form of data collection from users,'' Thomason said. "Providing location data, in exchange for use of apps or other services, can certainly be considered valuable consideration under the act.''
And the judge said that what consumers are providing clearly has economic worth.
"Location information is clearly valuable to Google's business model, as Google uses the information to make targeted ad placements, for which advertisers pay a premium,'' Thomason wrote. And he specifically rejected the company's efforts to compare its apps and services to free newspapers and TV and radio stations that provide services to consumers without cost.
"Free newspapers and broadcast radio are financed through untargeted advertising,'' he said.
"Newspapers and broadcast radio do not condition their services on receiving something 'back' from the consumers,'' the judge continued. "In contrast, Google allegedly takes user location information in exchange for the use of its apps and services and uses that same information to direct advertising targeted toward specific consumers.''
Some of the problems, Brnovich conceded, had been fixed since an initial Associated Press story in 2018 explained how Google records the movements of users even when they believe they have set the parameters of their devices to specifically block that. Only after the story was published, he said, did Google acknowledge that it was tracking even those who had turned off their "location history.''
"In other words, Google attempted to 'fix' this particular deception only when it was caught,'' Brnovich said.
But even then, he said, Google still made it difficult to understand how to turn off any location history. And he said that Google set up its devices to undermine the choices made.
Brnovich also said that Google had set up its devices to undermine the choices made.
"Presumably, the entire point of including various toggles and consents on devices and accounts is to give the user control over the state of their device and/or account,'' he said. "However, Google has pushed a variety of updates that automatically change a user's location settings and defaults without informing the user, much less seeking or obtaining consent.''
The way Brnovich sees is, the default setting for location sharing on devices should be "off.'' He said consumers should have to opt in as opposed to opting out.
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On Twitter: @azcapmedia