The fight for the future of consumer data is the real battle behind Google case

Google parent Alphabet has been ordered to pay $60m for secretly collecting consumer data. Picture: AFP/Getty Images

The parent company of search giant Google generates a little over $1bn in revenue a day.

It’s a staggering figure, with nearly two-thirds of this income coming globally from advertising sold across search, as well as sales on the tech major’s other platforms, such as mapping and the Google Play store. Advertising linked to Google’s YouTube video on demand business pulls in another $110m a day.

Australian courts have shown they are starting to apply more force when it comes to civil breaches by companies. However, the latest numbers from Google owner Alphabet highlight the $60m Federal Court fine slapped on it in recent days for misleading users over the tracking data they secretly stored when using Google services over Android phones is barely a drop in the bucket.

Recently appointed chair of the ACCC Gina Cass-Gottlieb. Picture: Sam Ruttyn

The tech company is valued at $US1.5 trillion ($2.1 trillion) – nearly the entire annual economic output of Australia — and this only serves to highlight the scale of the battle ahead.

The Federal Court found Google engaged in misleading conduct and made false claims to as many as 1.3 million Australian users because of the way it presented its collection, storage and use of personal location data in its privacy statements.

The Google fine comes just a few months after the Federal Court issued a near $45m fine against German travel booking major Trivago after it was found to have misled consumers over hotel room rates. Both legal actions were launched by the Australian Competition and Consumer Commission.

The harvesting and finetuning of individual data remains at the heart of the business model of players like Google and Facebook’s owner Meta. But how they secure permissions to use this data in the future is going to be a high-stakes battle against regulators.

Indeed, all companies will increasingly be lining up against consumer rules as data becomes the lifeblood of the digital economy. Banks, supermarkets, airlines and of course technology companies generate volumes of individual data. As companies invest more in automation, AI or data analytics, consumers risk being swept up in their loss of control in how the data is used.

The Google business model has been built around harvesting consumer data. Picture: Getty Images

ANZ’s now shelved talks around a multibillion-dollar acquisition of accounting software player MYOB was mostly driven by the prospect of the bank having full visibility (with consent) over its business clients’ accounts. Commonwealth Bank’s partnership with H2O.ai and development of a customer engagement engine sees the bank analysing as much as 157 billion data points in real time.

Elsewhere, burgeoning loyalty and reward schemes offered by retailers are more about knowing their customers’ habits so this can be used for targeted advertising. Supermarket major Woolworths last year paid more than $220m for a controlling stake in data science payer Quantium.

But it’s the tech giants in particular that need to be sent a message that consumer laws should be front of mind in dealing with the public.

Big implications

Google’s case has big implications for all companies in the way they present information about how their customer data is used. We are all used to scrolling through endless online screens of user agreements. But the Google case now means companies can no longer bury important information for consumers.

Instead critical information should be disclosed to consumers upfront.

“When communicating to consumers, the form and presentation of privacy statements, collection notices and privacy settings can be as important as the content,” says Jacqueline Downes, a competition law specialist and partner with Allens Linklaters in a case briefing note.

While it seems a one-sided battle against the world’s biggest companies, where Australian court actions against consumer law abuses of tech power are becoming potent is when they are used as a blueprint for other regulators around the world. For example, Google’s missteps here are likely to be repeated in Europe or the United States.

Court battles also have a habit of shining an uncomfortable light on the inner workings of tech companies, which can often be at odds with the seamless image their digital products present.

In this case the Federal Court trial even had the potential to put Google global chief executive Sundar Pichai in the spotlight if information from the documents secured were made public. It emerged that an urgent meeting dubbed as the “Oh Shit” meeting was held between various Google employees when the location tracking issue came to light. The ACCC’s discovery process revealed that Pichai was involved in these meetings, although there is no suggestion of wrongdoing by Pichai, merely he was present.

All companies are on notice they need to disclose up front how data is used.

The ACCC’s case against Google was the first legal action in the world to dig into Google’s approach to the collection of location data. Here Federal Court Justice Tom Thawley found some of Google’s Australian users who navigated its Android operating system were not aware of the tech company’s retention and use of their personal location data even when they had switched off location history settings. The case found that data was being collected as a default on position under another account setting titled Web & App Activity.

Essentially it boils down to a company telling its consumers one thing, and doing something else.

“Those users were misled and some of them are likely to have made different choices about the collection, storage and use of their location data,” Thawley’s judgment says. “The position of the consumers is highly significant.”

He also reminded Google and all companies that have “significant levels of interaction with consumers” and profit from data that consumer laws should be “front of mind”.

“It is not acceptable that consumers be exposed to being misled on these sorts of issues, even by conduct which is not deliberate,” he says.

Regulatory heat

Google is facing regulatory heat on several fronts, with activity increasing since the ACCC published its first digital platforms report from 2018. There the ACCC called out the significant market power of the tech giants Google, Facebook and to a lesser extent Apple. Worryingly it warned the market power of these digital platforms was becoming “entrenched” and was moving to adjacent and related services, including payments.

The ACCC’s fifth report into the digital platform services is due to be handed to the Treasurer at the end of next month. Here the ACCC is reviewing competition issues that emerged in its long running platforms review which largely impacts Google, Meta (Facebook) and Apple through its operation of the App Store.

Worryingly for the tech giants, this is the review that will recommend whether laws need to be updated or introduced to boost consumer protection.

Facebook owner Meta is also under investigation by the ACCC for market power. Picture: Getty Images

The ACCC in late June opened a new investigation into advertising technology. The UK’s Competition and Markets Authority and European Regulators also made a similar move. Elsewhere Google is facing legal action from the powerful US Department of Justice, alleging that Google breached competition rules relating to search. It is facing actions in relation to search tech from several US state-based attorney generals. (Google has said these cases have no merit and is defending itself.)

In May, European and UK regulators each opened a formal investigation into Google Play’s business practices, while Korean regulators are investigating Google Play’s billing practices. In Australia the ACCC has warned that both Google and Apple’s dominance of digital payments over their respective app stores could lead to greater regulation.

Under former chairman Rod Sims, the ACCC had been a first mover in many cases around consumer data rights and the market power of a player like Google. In a briefing note to the new Albanese government, recently appointed ACCC chair Gina Cass-Gottlieb said the regulator’s role was to “make markets work for consumers now and in the future”.

This was not by overriding markets, but by “maintaining and promoting competition and fixing market failure where we can, and by protecting the interests and safety of consumers in the support of a fair marketplace”.

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