A privacy lawsuit involving the now-defunct Google+ social media site has been settled for $350 million, after a lengthy appeals process played out. Google shareholders initially expected to get nothing after the initial filing was dismissed by a judge in 2020, but the case eventually worked its way to the 9th U.S. Circuit Court of Appeals. Individual claimant amounts have yet to be determined, but the total pool after attorney and legal fees are deducted is likely to be well over $200 million.
Google shareholders looking at windfall from case that was given poor initial prospects
The privacy lawsuit dates all the way back to 2018, when Google internally discovered that the Google+ API was being abused to access the private data of about half a million of the social media service’s users. Google opted not to publicly declare the breach, as they were not legally compelled to. News of it came via the Wall Street Journal in late 2018. Google shareholders contend that the company kept the issue under wraps due to the Cambridge Analytica scandal that Facebook was experiencing at the time, believing that they would suffer a similar negative PR blow. This was supported by an internal company memo that became public.
As the news of the exploitable software glitch gradually came out, Google shareholders took a hit as the company collectively lost tens of billions of dollars in market value. The lead plaintiff in the case is Rhode Island Treasurer James Diossa, who was responsible for overseeing a state pension fund that held stock in Google parent company Alphabet. Google+ was shuttered in 2019 after an eight-year run due in part to repeated technical issues with unauthorized API access (as well as low user engagement).
The present privacy lawsuit was first initiated in 2018, with the first judge to rule on it dismissing it in 2020. It was then taken to the 9th U.S. Circuit Court of Appeals in San Francisco in 2021, where it ended up in mediation for over a year. If the settlement is approved by the 9th Circuit judge, the proceeds will be available to Google shareholders who held stock at any time from April 23, 2018, to April 30, 2019. Eligible parties will be notified by mail, and a website will be set up for those that do not have a current address available.
A separate class-action privacy lawsuit involving users who had private data exposed during the incident was settled in 2018 for $7.5 million, leading to very low payments for each of the claimants. The current privacy lawsuit will likely be more substantial given a far smaller amount of Alphabet stockholders, with the bulk of the company’s shares controlled by institutional investors and its founders.
Privacy lawsuit just one of Google’s current legal woes
Google is in the midst of another rash of legal issues. Just a little over a month ago, it settled another privacy lawsuit that involved the “incognito” mode in its Chrome browser. Claimants in that suit alleged that they were continuing to be tracked around the internet by Google’s sprawling ad network even though the browser promised safe and private browsing when this mode was enabled. It is not yet known how much that case was settled for, but the plaintiffs had been asking for a minimum of $5 billion.
The company also faces a multi-front antitrust battle in the coming months. It will be taken to court by the Department of Justice (DOJ) in September, facing charges that its ad tech business is a monopoly and that it has abused its dominant market position to suppress competitors. A coalition of states headed by Texas is suing it for the same reason, with a trial date set for March 2025. And a Washington DC court is presently hearing a case brought by the DOJ that argues it also has a monopoly on web search; closing arguments in that case will take place in May.
Google’s antitrust issues are not limited to the US. In mid-2023, EU regulators charged the company with using its dominant position in the online ad market to squash rivals. The European Commission previously fined Google €1.49 billion in 2019 for similar abusive practices specific to its AdSense program. Its app store policies are also under fire, after the company lost a case to Fortnite publisher Epic Games in late 2023.
Another privacy lawsuit by Google shareholders is also brewing. A class action filed in the Northern District of California in March 2023 alleges that Alphabet knowingly engaged in monopolistic behavior and concealed it from Google shareholders, spanning a broad range of its actions since 2020. The suit seeks compensation for anyone that purchased Alphabet stock between February 4, 2020, and January 23, 2023. The suit is even more pointed than the government monopoly investigations as it directly accuses CEO Sundar Pichai and top executives of intentionally engaging in anticompetitive practices to bolster the company’s revenue.