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Google finds cheap way out of multibillion-dollar 'Wi-Spy' suit

Court filing shows that the settlement will be distributed to a handful of consumer privacy advocacy groups

San Francisco

GOOGLE is poised to pay a modest US$13 million to end a 2010 privacy lawsuit that was once called the biggest US wiretap case ever and threatened the Internet giant with billions of dollars in damages.

The settlement would close the books on a scandal that was touched off by trucks used by Google for its Street View mapping project. Cars and trucks scooped up e-mails, passwords and other personal information from unencrypted household Wi-Fi networks belonging to tens of millions of people all over the world.

The debacle became known as "Wi-Spy," and it caused almost as much of an uproar as Facebooks's more recent Cambridge Analytica scandal.

The accord still requires approval of a San Francisco judge. But under the settlement, proposed last Friday night with no fanfare, the owners of the Wi-Fi networks whose information was captured by Google will not get individual payouts, except for about 20 plaintiffs who filed the complaint as a class action.

Lawyers for the plaintiffs said that it would be difficult to identify masses of affected people, a decade later, from the random snippets of data that the company collected when its vehicles drove by their homes.

Instead, what is left of the US$13 million - after administrative costs and the lawyers who brought the lawsuit get a commission of as much as 25 per cent - will be distributed to a handful of consumer privacy advocacy groups, according to a court filing detailing the terms of the deal.

Also, Google will destroy all the data that it still possesses and commit to teaching people how to protect their privacy on the Internet.

The amount that Google is offering is less than one-sixth the net income that the Alphabet Inc unit generates on average in a single day. That is in line with the relatively small settlements that Google, Facebook Inc and other Internet companies have paid over the last decade to end a variety of lawsuits over alleged privacy violations.

One challenge to larger settlements is the hurdle that consumers face to prove they were actually injured and are legally entitled to damages.

The Street View lawsuit is one of the few where consumers gained the upper hand, notably when the US Court of Appeals in San Francisco in 2013 rejected Google's argument that it was legal to intercept open Wi-Fi networks because they were akin to AM/FM radio transmissions. The court's conclusion that the federal Wiretap Act applied meant that if Google went to trial to fight the allegations and lost, it could be hit with US$10,000 in damages for every violation.

But in Friday's filing, the plaintiffs' lawyers said the settlement was justified, in part, because there was a risk that they could still lose the case - and end up with nothing. BLOOMBERG