Does Fining Google Really Achieve Anything?By: Drew Bowling - April 17, 2012
Over the weekend, the Federal Communications Commission released a heavily redacted report that detailed the consequences of Google’s lack of transparency and cooperation with an investigation revolving around the non-consensual collection of information from people using unsecured wi-fi networks. It turns out that, as those Google Street View cars were roaming around and capturing ground-level imagery of cities around the world, the cars were also running some allegedly “unauthorized” software that was sopping up internet activity from people in the surrounding area, everything from emails to browsing habits to chats.
Sure, some of you may wave off the gravity of the situation by saying that’s what people get for using a network that’s not encrypted, but this isn’t really the time for victim-blaming (as if there ever really is a time for that). Consequently, the FCC hit Google with a $25,000 fine, but that was only because of Google’s obstruction in the investigation. As for the What and Why concerning Google’s activities, the investigation has been dropped.
While that fine has been described by at least one group as “chump change” with respect to the full corporate value of Google, it does raise a good question: what do fines even mean to Google? As far as we know, the company is still in possession of all of that illicit information the Street View cars collected, which will undoubtedly be applied into some sort of money-making advertising that will likely more than make up for the $25,000 that Google had to pay as a result of obtaining it in the first place.
Herein lies the question: In this specific case, was it worth it for Google? Was $25,000 worth poaching loads of information from unwitting internet users? If you’re Google and you weigh the costs against the benefits of the situation, does that fine really amount to an investment toward future profits?
Don’t get me wrong: $25,000 is a lot of money. It’s a small fortune to me and in 2006 that was about how much the average household member in the United States was earning. But in Google terms of money, that’s like scooping a pail of water from the ocean: it’s hardly likely to produce any kind of observable change. The company boasts a $200 billion market capitalization with shares regularly trading above $600. In short: Google is loaded.
Fining Google is like playing Monopoly against an opponent who owns hotels on all the good properties while you’ve been reduced to a measly one-housed Baltic Avenue property. Google can afford to recklessly roll the dice because it doesn’t matter where their thimble lands. Oh, Google happened to roll a number that scoots it onto your Baltic Avenue? Who cares. The company hands over some bills for their turn but it won’t really feel the burn of that loss because it’s got all the money in the game. What it loses due to minor obstacles is bound to recouped sometime in the near future.
Thanks to another example of Google’s impropriety, though, that Monopoly-style immunity could be undergoing a severe endurance test in the near future, one that could have more consequences than simply dropping Google’s bank numbers by a couple of number fractions.
The San Jose Mercury News is reporting that, as early as within the next 30 days, the Federal Trade Commission could dish out colossal fine to Google due to the company’s past practices of bypassing security settings in Apple’s browser, Safari.
For those of you that don’t recall, in February of this year it was discovered that Google had been circumventing Safari users’ (on both mobile and computer versions) privacy settings in order to continue to collect information about their browsing habits. In this day and age, internet user information is as good as gold so of course companies want to mine as much of it as they can. As it were, Google wanted the gold a little too much and, as a result, the FTC said that the company’s behavior violated an agreement made in 2011 when Google agreed not to misrepresent its privacy policies (this was after another occasion of Google mishandling user privacy, one that was related to it’s now-defunct social service, Buzz). After February’s discovery that Google may have broken that agreement with the FTC, the agency declared that Google could possibly be fined $16,000 per violation per day.
Anybody with even the most remedial grasp of addition can tell you that, given the legions of people who use Safari on both iOS devices and Apple computers, Google’s fines could potentially add up quickly and total into crushing sums.
Fining Google one defined sum of $25,000 is definitely enough to give the company pause as it will send the message that Google needs to recalibrate how its going about collecting information from internet users to a method more congruent with the expectations of the government. Still, with Google, that kind of penalty is low enough that the company could possibly argue that it was worth the risk. But the FTC fines have the possibility to skyrocket into the millions, thus negating any argument that Google’s actions were worth any risk.
Google has argued before that it didn’t expect that the whole Safari-gate problem would resurrect the previous settlement the company had made with the FTC, and that very well may be true. But as the president of the American Consumer Institute told the Mercury News, the fine issued by the FCC this past weekend may put the pressure on the FTC to not hold back in penalizing Google over Safari-gate.
Google is by no means the only tech company to run afoul of the government for the way it’s conducted business. Almost any company that’s currently perched atop of the tech world got there by bending (and sometimes breaking) the rules and hoping to not get caught. No company has clean hands. But if the FTC brings the whip down upon Google and does fine the company upwards of millions of dollars, would even that be enough to change the practices of tech companies in respect to how they handle consumer information? Would the punishment be enough to really drive home the lesson the FTC hopes to teach: don’t mistreat consumers’ trust but, more importantly, don’t try to play the FTC for fools.
It’s telling of these companies’ success that the only way the government can communicate to them that they’ve done something wrong is to go after the companies’ wallets. It remains to be seen if this type of punishment will actually be effective. In the meantime, how the FTC aims to make an example of Google could have ramifications on how tech companies continue to do business in the future. If Google gets off light, that could embolden it and other companies to continue to risk financial penalty in order to explore possibly extra-legal business practices that could ultimately return much more money than the company spent in trifling fines. If Google feels the full wrath of the FTC, though, business habits of several companies could soon be reevaluated in order to afford such a similar fate.