Google Agrees to $5 Billion Settlement Over Incognito Mode Tracking

Google has agreed to settle a class action lawsuit over claims that it unlawfully tracked users’ browsing activity even when using Incognito mode. The $5 billion settlement, covering millions of Google account holders, is one of the largest privacy-related payouts by a technology company.

Background of the Lawsuit

The lawsuit originated in 2020 when plaintiffs alleged that Google’s tracking practices violated federal wiretap laws. Specifically, the plaintiffs claimed that Google continued to track browsing history and online activity even when users activated Incognito mode in the Chrome browser.

Incognito mode is marketed as a way for users to browse the web privately without having their activity saved by either Chrome or Google. However, the lawsuit contended that Google “tracked and collected consumer browsing history and other web activity data no matter what safeguards consumers undertake to protect their data privacy.”

By continuing to track users who explicitly opted for private browsing, Google violated the federal Wiretap Act prohibition on unauthorized interception of communication, the lawsuit said.

Google Denied Wrongdoing But Opted for Settlement

Google has not admitted any wrongdoing in the case, but has decided to settle rather than continuing to battle in court.

A Google spokesperson said the company is “pleased to have reached a settlement that addresses the needs of both users and developers.” While denying that Incognito mode was deceptive, Google acknowledged the confusion around how private browsing functions:

We will be making updates in response to public feedback around privacy controls. Incognito mode in Chrome gives you the choice to browse the internet without your activity being saved to your browser or device. As we clearly state each time you open a new Incognito tab, websites might be able to collect information about your browsing activity during your session.

The settlement ensures that Google avoids protracted litigation that could have resulted in even higher payouts. Consumer class action lawsuits often take years to resolve in courts and the ultimate outcomes are unpredictable.

By settling now for $5 billion, Google likely views removing this uncertainty as preferable for the business. The company reported over $76 billion in advertising revenue in Q3 2022 alone, so the settlement only dents about one quarter’s ad earnings.

Timeline of Key Events in the Case

Here is a timeline of some notable developments over the 3+ years since the case was first filed:

What Google Tracks in Incognito Mode

While Incognito prevents browsing history and cookies from being locally stored, other tracking still occurs, including:

• ISP Tracking: Internet service providers can still view all unencrypted web traffic.

• Location Data: Google confirms that location data is used for relevant ads and recommendations even during Incognito sessions.

• Google Account Activity: Browsing on Google services like Search and YouTube is linked to your account.

So Incognito only prevents activity logging on the browser itself. Websites and third-party networks continue to use tracking techniques like cookies, device fingerprinting, and IP collection.

Key Implications and What Happens Next

The settlement has broad implications both for online privacy expectations and Google’s data practices:

• Greater Transparency Required: As part of the settlement, Google will provide more prominent and detailed Incognito mode disclosures so users better understand what is and isn’t private.

• Potential Impact on Tech Industry: Other technology firms may need to re-evaluate their private browsing protections in light of this case. Plaintiffs specifically called out Google for being “unlike its competitors” in tracking Incognito activity.

• Changes to Data Policies: Google will likely implement new data governance policies and tools to align with the settlement terms and address gaps that allowed the unauthorized Incognito tracking.

In terms of next steps, settlement class members do not need to take any action initially to receive payouts. The court will now review the proposed terms of the settlement for fairness and adequacy before final approval. Eligible Incognito users would then receive payment notifications explaining how to claim their portion of the $5 billion fund.

Given the scale of active Google account holders, individuals will likely receive relatively small amounts as their share. However, the settlement overall represents a major milestone in reining in perceived privacy intrusions by Big Tech companies like Google.

Critical Perspectives on the Settlement

The settlement is being viewed as a positive step by many privacy advocates, but some criticism remains around whether it goes far enough. A few key skeptical takes:

• The payout, while record-breaking, still represents little financial risk for Google given its near trillion dollar market cap. Critics argue fines would need to be massively larger to change underlying data collection practices.

• No admission of guilt by Google limits wider accountability. There are calls for federal privacy regulation with stiffer penalties rather than just individual lawsuits.

• Google likely factored in settlement costs when building out their invasive tracking systems. Until business models change, privacy infringements simply remain “cost of business.”

• Individual payouts from the fund could be small to the point of being meaningless for such a valuable right as privacy. Settlement terms favor attorneys over individuals.

So while welcome, the settlement is just one part of the equation. How Google and its tech peers modify their systems along with legislation protecting consumer privacy will determine if user rights substantially improve long-term.

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