Google FTC Fine – Missing Perp Walk Demeans Public Interest

by Mike Wendy on August 11, 2012

When you look closer at the FTC’s $22.5 million fine against Google the other day, it’s apparent that instead of a 4-1 “decision” – which is bad in its own right – it was, in a practical sense, a unanimous order against Google.  The lone dissenter, Commissioner J. Thomas Rosch, felt it was clear Google contemptuously violated the Buzz settlement, and that it acted deceptively with its Safari browser hack.  Where he couldn’t agree with the others was in their condoning of Google’s “denial of liability,” even though the company’s “second bite at the apple” deception strongly suggested otherwise.

Not to split hairs, this acceptance by the FTC of Google’s “denial of liability” seems no small matter.  As I see it, the “public interest” demands an admission or acceptance of wrong-doing – that this admission and the resulting opprobrium remain important elements in protecting the “public interest,” deterring not only Google, but others, too, from harming consumers in the future.

Instead, without such an allocution, the fine is simply chump change, amounting to no more than the (exceedingly cheap) cost of doing business.

The cost is bigger, of course.  As the New York Times reports today, “allowing [a] company to deny charges it was agreeing to settle undermine[s] the commission’s authority.”  Now, admittedly, I’m no big fan of our regulatory infrastructure.  But, if you have to have one, the least it could do is get the wrong-doers to fess up publicly to their transgressions when they’ve done them.

Lacking this – as here – it makes the agency look even less credible than it already is, providing little real deterrent or guidance to prevent future malfeasance.

Hey, if the sheriff’s a wimp, then the town’s for the taking, right?

That’s what Google’s banking on.

***

In the market-oriented techpolicy community we look to a handful of tools to keep regulation at bay.  Among these is the use of existing law as a backstop to curb bad behavior.  Sadly, as Google seems adept at proving, that backstop appears as porous and ineffective as a wet paper towel.

An agency that chooses not to trot out wrong-doers for their mandatory perp walk is suspect in my book. Combine that with the FCC’s Wi-Spy wrist-slap earlier this year and one has to wonder if Google has become so powerful that Uncle Sam has become somehow afraid of offending, and thus “righting,” the bratty behemoth.  To this end, one can’t but avoid the troubling conclusion that Uncle Sam’s perpetually anemic response to Google’s continued bad acts makes Uncle Sam in fact a willful enabler of the crummy behavior, perpetuating a corporate version of Veruca Salt who could never fear being tossed down the bad egg chute by the Eggdicator.

That stated, the rule of law, as well as consumer welfare tied to it, are not served by this reluctance to truly and forcefully address the company’s recidivism.

Google is a bad egg here.  The Eggdicator should have been used.

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- EXCERPT -

Dissenting Statement of Commissioner J. Thomas Rosch

United States of America v. Google Inc.

August 9, 2012

As I have said before, our basic statute, Section 5 of the FTC Act, obliges us to determine whether there is both “reason to believe” there is liability and whether the complaint is in the “public interest” before we vote out any complaint, whether it be a litigation complaint or a consent decree.  There is no question in my mind that there is “reason to believe” that Google is in contempt of a prior Commission order. However, I dissent from accepting this consent decree because it arguably cannot be concluded that the consent decree is in the public interest when it contains a denial of liability.

[T]he Stipulated Order for Permanent Injunction and Civil Penalty Judgment provides that “Defendant denies any violation of the FTC Order, any and all liability for the claims set forth in the Complaint, and all material allegations of the Complaint save for those regarding jurisdiction and venue.” Yet, at the very same time, the Commission supports a civil penalty of $22.5 million against Google for that very same conduct. Condoning a denial of liability in circumstances such as these is unprecedented…

…[T]his is not the first time the Commission has charged Google with engaging in deceptive conduct. This is Google’s second bite at the apple. The Commission accuses it of violating the Google Buzz consent order by “misrepresent[ing] the extent to which users may exercise control over the collection or use of covered information” and accordingly, seeks civil penalties for those violations. In other words, the Commission charges Google with contempt. This scenario – violation of a consent order – makes the Commission’s acceptance of Google’s denial of liability all the more inexplicable… (All emphasis added)

 

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