A federal judge’s ruling late Friday in a key privacy case demonstrates the need to implement tough “Do Not Track” rules and to take decisive action on the antitrust front against Google.

Judge Susan Illston approved the Federal Trade Commission’s $22.5 million settlement with the Internet giant for hacking past privacy settings on Apple’s Safari browser in U.S. District Court in San Francisco, in a deal that Consumer Watchdog had argued was insufficient in light of Google’s wanton privacy violations.

“The Court also grants additional deference where the decree has been negotiated  by a governmental agency that is an expert in its field,” Judge Illston said in her decision.

I was disappointed with the ruling, but think we made important points that will affect how similar cases are dealt with in the future. Drawing the public’s attention to this case was tremendously important. I’m glad we did it.

Attorney Gary Reback of Carr & Ferrell represented us as an amicus curiae or friend of the court. Frankly, I expected an uphill battle with Google and the FTC aligned against us.  Together the government and Google defended the deal that had been negotiated in secret.

Judge Illston did not surprise when she began the hearing by saying her “preliminary view” was to approve the settlement. We opposed the deal for three basic reasons:

1. The settlement allows Google to deny that it did anything wrong.

2. The $22.5 million fine — a lot for you and me — is insufficient for a company like Google with revenue of $40 billion a year. Really it’s just chump change. Google makes $22.5 million in about five hours. Google was liable for fines totaling $16,0000 per day per violation. If you consider each wrongly placed cookie a violation — and you should — Google quickly reaches a liability in the billions. A fine of that magnitude would have caught Google executives’ attention.

3. The injunctive relief in the settlement is insufficient.  Google is allowed to keep the ill-gotten data it obtained by hacking around the Safari privacy settings, which is the browser used on iPhones and iPads.

Reback made the arguments in two excellent briefs before the hearing. Both are well worth reviewing. The first is particularly valuable for the way it lays out Google’s history of privacy invasions. Read the original amicus brief here and our response brief here.

As the hearing began Judge Illston said there was no need to require Google to admit it did anything wrong. She said she had no problem with the amount of the fine. She did, however, have questions questions about allowing the Internet giant to retain the wrongfully acquired data.

The government and Google’s attorneys tried to make the case that the Google wouldn’t use the information, so keeping it was irrelevant. I thought Reback effectively rebutted their position, but then, you’d expect me to think that.

By the end of the day, though, Judge Illston had ruled against us.  As Reback told The Associated Press’ Mike Liedtke, after the hearing, a consent decree ”is not a good way to police Google,”

What the decision does is allow Google executives  to buy their way out of trouble with what for them is pocket change and then deny doing anything wrong.  As our briefs made clear, Google has demonstrated an ability to out maneuver government regulators repeatedly and ride roughshod over the privacy rights of consumers.  Google continues to be disingenuous about its practices.

That’s why the decision makes two things clear: First, if consumers are to have any privacy at all and be able to control what data is gathered about them, tough Do Not Track rules must be implemented. Second, as we told the FTC last week, the Commission needs to file an antitrust suit against Google and take it to trial in U.S. District Court. The FTC should seek to force Google to divest its Motorola Mobility subsidiary, separate  search from advertising, and undergo the same sort of regulation as a public utility.

The Federal Trade Commission’s role in keeping Google’s abuses in check is essential. The Internet is too important to allow an unregulated monopolist to dominate it.

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Posted by John M. Simpson. John is a leading voice on technological privacy and stem cell research issues. His investigations this year of Google’s online privacy practices and book publishing agreements triggered intense media scrutiny and federal interest in the online giant’s business practices. His critique of patents on human embryonic stem cells has been key to expanding the ability of American scientists to conduct stem cell research. He has ensured that California’s taxpayer-funded stem cell research will lead to broadly accessible and affordable medicine and not just government-subsidized profiteering. Prior to joining Consumer Watchdog in 2005, he was executive editor of Tribune Media Services International, a syndication company. Before that, he was deputy editor of USA Today and editor of its international edition. Simpson taught journalism a Dublin City University in Ireland, and consulted for The Irish Times and The Gleaner in Jamaica. He served as president of the World Editors Forum. He holds a B.A. in philosophy from Harpur College of SUNY Binghamton and was a Gannett Fellow at the Center for Asian and Pacific Studies at the University of Hawaii. He has an M.A. in Communication Management from USC’s Annenberg School for Communication.

Federal Trade Commission Chairman Jon Leibowitz has given Google what Bloomberg News Service describes as an ultimatum to settle the agency’s antitrust investigation in the next few days or face a lawsuit.

Citing unidentified sources, Bloomberg reporter Sara Forden on Monday wrote:

“Google has been in discussions with the agency for about two weeks and hasn’t put any remedy proposals on the table, said the people, who declined to be identified because the negotiations are private.”

FTC staff have been investigating whether the Google has been abusing its dominance of the Internet for more than a year.  The staff has reportedly recommended issuing a complaint focused on Google’s search practices and also for misusing its patents to block rivals smartphones.

The FTC has told Google it won’t accept a resolution short of a consent decree, Bloomberg’s Forden wrote,  and is prepared to take action in the next week or two.

Google is continuing its usual happy-face spin. “We continue to work cooperatively with the Federal Trade Commission and are happy to answer any questions they may have,” Google Spokesman Adam Kovacevich told Bloomberg.

At first blush the idea that the FTC is holding out for a consent decree may sound reassuring.  For what it’s worth though, I’m a little concerned that a settlement  might not do enough.

Chairman Leibowitz is expected to step down from the agency soon.  There is speculation that in a nod toward his legacy, he might be willing to agree to a less than adequate settlement, just to be able to say the FTC got the Internet giant on his watch.

Franky, there is a similar concern among privacy advocates that there could be a willingness to accept a weak Do Not Track standard for the same reason.

If the Commission files a lawsuit, the FTC could proceed in its own administrative court or in federal court.  No decision has been made about the venue.

Meanwhile there was a development over the summer that might give Google pause.  The Commission has changed its policy and can now seek “disgorgement” — forcing a firm to surrounded profits as an antitrust penalty.  If the FTC goes that route, it might really concentrate the minds of the geeks in Mountain View.

And don’t forget the other side of the Atlantic.  The EU is pressing Google to resolve its antitrust concerns or face a formal complaint.  That, too, could come in a matter of weeks.

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John M. Simpson is a leading voice on technological privacy and stem cell research issues. His investigations this year of Google’s online privacy practices and book publishing agreements triggered intense media scrutiny and federal interest in the online giant’s business practices. His critique of patents on human embryonic stem cells has been key to expanding the ability of American scientists to conduct stem cell research. He has ensured that California’s taxpayer-funded stem cell research will lead to broadly accessible and affordable medicine and not just government-subsidized profiteering. Prior to joining Consumer Watchdog in 2005, he was executive editor of Tribune Media Services International, a syndication company. Before that, he was deputy editor of USA Today and editor of its international edition. Simpson taught journalism a Dublin City University in Ireland, and consulted for The Irish Times and The Gleaner in Jamaica. He served as president of the World Editors Forum. He holds a B.A. in philosophy from Harpur College of SUNY Binghamton and was a Gannett Fellow at the Center for Asian and Pacific Studies at the University of Hawaii. He has an M.A. in Communication Management from USC’s Annenberg School for Communication.

Google — facing the possibility of a penalty of around $4 billion — is trying to cut a deal with European antitrust regulators that would settle the regulators’ objections without having to pay a fine.

It’s not certain that an agreement can be reached, but if one is, it will have a direct impact on the United States.  Joaquin Almunia, EU competition commissioner, said that any concessions the Internet giant offers to resolve the EU’s antitrust concerns would be applied worldwide.

“We will look for worldwide solutions; it will not be very useful to get European-wide solutions,” he said.

One of the main complaints against Google is the way it unfairly favors its own properties ahead of competitors in search results.  We documented that two years ago in our study, Traffic Report: How Google is Squeezing out Competitors and Muscling Into New Markets.

In May the Commission said it was concerned that Google was favoring its own services in search, copying material from websites of competitors without permission, shutting out advertising competition and placing restrictions on the portability of online search advertising campaigns from its platform AdWords to the platforms of competitors. Almunia told the company to offer changes or face a formal statement of objections with the risk of fines in the billions of dollars. In Europe antitrust penalties can be imposed before a court proceeding.

At the time I predicted that Google would not offer meaningful remedies.  Despite my skepticism, the EU is saying that Google is apparently responding. The New York Times quoted Almunia from a news conference Wednesday:

“We were trying to clarify to them how these solutions should be established. They were exploring with us what kind of solutions we were asking for, and now we have enough clarifications so as to start the process of technical meetings.”

“They will try to solve it. And I have reasons to believe that they think it’s worth it.”

Funny how $4 billion concentrates the mind, isn’t it.

Reportedly, one of the things that moved the possibility of a settlement forward was that Google agreed that any concessions it makes on search will apply to all  platforms including computers and mobile devices.

I’m sure the EU is acting in good faith.  I have my doubts about Google. The real difficulty in accurately assessing the situation is the secrecy that surrounds the negotiations.  We simply don’t know what Google has proposed and what the EU wants.  When an antitrust case gets to this stage, it really all should be on the public record.

Here is what another critic said, as reported by The New York Times:

“For years, Google has said it deserves the benefit of the doubt,” said Jonathan Zuck, president of the Association for Competitive Technology, an industry group heavily financed by Microsoft. “Unfortunately, they’ve played us for fools every time.”

Mr. Zuck praised the commission’s “persistent work,” but said an “effective remedy” required an admission by Google of wrongdoing. “Without that understanding on the part of Google, it will never implement the kind of fundamental changes to its business practices that are necessary to curb these abuses,” he said.

I agree.

Besides the the European antitrust investigation, the Internet giant faces antitrust investigations by the U.S. Federal Trade Commission and several states. Antitrust officials in Korea, India and Brazil are also looking into Google’s business practices. A European deal could well serve as a blueprint for settlements with other authorities.  The FTC and the EU have been in close touch about their investigations.

One difference is that the FTC’s probe includes an investigation into whether Google has abused its dominance of the Android operating system. The EU is not looking into that, but Almunia held out the possibility that it might.

Interestingly, in the semi-boilerplate language found in Google’s just-filed Form 10-Q, is a clear indication that the Internet giant finally gets that it is under scrutiny:

We are subject to increased regulatory scrutiny that may negatively impact our business.

The growth of our company and our expansion into a variety of new fields implicate a variety of new regulatory issues, and we have experienced increased regulatory scrutiny as we have grown. In particular, we are cooperating with the regulatory authorities in the United States and abroad, including the U.S. Federal Trade Commission (FTC), the European Commission (EC), and several state attorneys general in investigations they are conducting with respect to our business and its impact on competition. Legislators and regulators, including those conducting investigations in the U.S. and Europe, may make legal and regulatory changes, or interpret and apply existing laws, in ways that make our products and services less useful to our users, require us to incur substantial costs, expose us to unanticipated civil or criminal liability, or cause us to change our business practices. These changes or increased costs could negatively impact our business and results of operations in material ways.

I hope the Europeans extract meaningful concessions, though  I remain skeptical that will happen. Google has a history of stonewalling and foot-dragging.  The best solution would be to break Google into different companies devoted to different lines of business.

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John M. Simpson is a leading voice on technological privacy and stem cell research issues. His investigations this year of Google’s online privacy practices and book publishing agreements triggered intense media scrutiny and federal interest in the online giant’s business practices. His critique of patents on human embryonic stem cells has been key to expanding the ability of American scientists to conduct stem cell research. He has ensured that California’s taxpayer-funded stem cell research will lead to broadly accessible and affordable medicine and not just government-subsidized profiteering. Prior to joining Consumer Watchdog in 2005, he was executive editor of Tribune Media Services International, a syndication company. Before that, he was deputy editor of USA Today and editor of its international edition. Simpson taught journalism a Dublin City University in Ireland, and consulted for The Irish Times and The Gleaner in Jamaica. He served as president of the World Editors Forum. He holds a B.A. in philosophy from Harpur College of SUNY Binghamton and was a Gannett Fellow at the Center for Asian and Pacific Studies at the University of Hawaii. He has an M.A. in Communication Management from USC’s Annenberg School for Communication.

Over the weekend The Los Angeles Times published a new poll suggesting that we may have reached the tipping point on online privacy, finally forcing policymakers to take notice and react to ease people’s concerns.

The USC Dornsife/Times poll found a stunning 82 percent of Californians say they are very or somewhat concerned about “companies collecting your personal information when you visit their websites or use their services.”

The new poll confirms a Consumer Watchdog’s poll findings nearly two years ago when we were battling to raise privacy issues as a priority that 84 percent of Americans favor preventing online companies from tracking personal information or web searches without your explicit approval. Ninety percent supported more laws to protect privacy.

The most damning aspect of the USC Dornsife/Times poll is the lack of trust shown in some of the tech world’s biggest brands.  Respondents  were asked to rate six on whether they trusted the companies to be responsible with personal information, with 0 meaning no trust and 10 meaning complete trust.

In a clear blow to the tech giants, none scored above 5.  Apple was highest with a score of 4.6, followed by Google at 3.8, LinkedIn at 3.0, YouTube (owned by Google) at 2.8.  Facebook was 2.7, just ahead of last place Twitter, 2.4.

Those are not numbers that any company who relies on consumers can possibly be pleased with, no matter how you spin it.  As Linda DiVall, president of American Viewpoint, the firm conducting the poll, told the Times:

“I thought the ratings were strikingly low. If I were involved with the branding image of those companies, I would be very concerned.”

That may be a reason industry is scrambling to appear more privacy friendly. A number of key players are participating in the W3C (World Wide Web Consortium) effort to set a standard for a Do Not Track mechanism and what the obligations would be for a site to be compliant if it receives a DNT message.  Yahoo! last week said it will honor the standard and Google has finally agreed to offer the DNT option its browser, Chrome.  Firefox, Safari and Internet Explorer already give users the option; the problem is that websites are under no obligation to honor the message.

But, as I said, I think we may have reached a tipping point on privacy.  In February the White House offered its privacy proposal, calling for a Consumer Privacy Bill of Rights.  Last week the Federal Trade Commission released its privacy report and strongly endorsed Do Not Track.

Conservative Rep. Joe Barton, (R-TX) told the Times that the poll “reaffirms my opinion that privacy is a big deal – and it’s becoming a bigger deal.” He is partnering with liberal Rep. Ed Markey (D-MA) in sponsoring privacy legislation.

Silicon Valley’s premier companies have earned our distrust by continually playing fast and loose with our information. Google unilaterally changed its privacy policy and announced it will combine data across all its services.  It was then caught deliberately circumventing the Safari browser’s privacy settings. The point is that we’ve reached a tipping point, precisely because the companies have continued to invade our privacy.

We need to continue pushing back and demanding action from policymakers until we finally have regained control of our information. FTC Chairman Jon Leibowitz got it right when he said nobody has the right to put something on your computer without your permission. Now we need to make sure the Administration, Congress and the FTC enact laws and regulations to protect our privacy. If they don’t, in California at least, there is another option: a ballot initiative in 2014.