Google Inc. (GOOG) $22.5M FTC Settlement Will Be Challenged

Google Inc. (NASDAQ:GOOG) is ready to write its $22.5 million check to the Federal Trade Commission for privacy violations – but first, the FTC has explaining to do. A judge allowed Consumer Watchdog, a consumer-advocacy group, to challenge the FTC settlement proposal with Google on the grounds that the agreement does not include an explicit recognition of guilt for Google.

Google Inc. (NASDAQ:GOOG) was issued the largest FTC fine in history for claims of breaching privacy of users of the Safari browser on Apple Inc. (NASDAQ:AAPL) devices. The company allegedly placed cookies on Safari users’ browsing when it claimed that it did not do such tracking. The FTC investigated and made an agreement with Google Inc. (NASDAQ:GOOG) that would require the firm to pay $22.5 million in fines, but it was not required to acknowledge any culpability.

Claiming that is  not in the “public interest,” as most settlements are to be in order to be approved, Consumer Watchdog filed a motion seeking friend-of-the-court status to challenge the settlement, and the federal judge granted the motion late Tuesday.  The group wants to force the FTC to re-negotiate the settlement and go further in handling cases in terms of guilt and wrongdoing.

“The settlement is particularly the start of a very slippery slope,” said John Simpson of Consumer Watchdog. “It’s very important the FTC get called on this.” In the group’s motion, it criticized the settlement agreement as not being in the public interest, mainly because the deal omitted the provision of Google Inc. (NASDAQ:GOOG) admitting guilt for the violation. The FTC approved the agreement on a 4-1 vote, and Consumer Watchdog focused mainly on the feedback of the one dissenting commissioner, J. Thomas Rosch, who opposed the settlement on that one provision – no admission of guilt.

The FTC did not argue against the motion, so Consumer Watchdog has until Sept. 21 to file a full brief, while the FTC and Google Inc. (NASDAQ:GOOG) are expected to reply one week later.

Could a new agreement mean a lower fine in exchange for admission of guilt? Would the admission even matter anymore? Is this really in the public interest? Well, this could be of interest to investors in Google stock, such as hedge-fund managers like  Julian Robertson of Tiger Management.