Clifford Chance

The Federal Court of Australia has ordered Google LLC to pay the Australian Competition and Consumer Commission (ACCC) a A$60m penalty, in the first public enforcement outcome arising out of the ACCC’s Digital Platforms Inquiry. 

Following the Federal Court of Australia's earlier finding that Google LLC and Google Australia Pty Ltd breached the Australian Consumer Law by falsely representing to Android users that the “Location History” setting was the only setting which affected whether Google collected, kept and used personally identifiable data about their location, the Court has held that a penalty of AUS$60m as agreed between the parties was an "appropriate remedy".

Background

The ACCC alleged that Google LLC and Google Australia Pty Ltd contravened the Australian Consumer Law by engaging in misleading or deceptive conduct and false or misleading representations to consumers regarding Google's collection, keeping and use of personal location data.

Specifically, the ACCC alleged that particular users of mobile devices with Android OS were misled by two settings on those devices; namely “Web & App Activity” and “Location History”. 

When setting up a mobile device with Android OS, the "Web & App Activity" setting was defaulted to “on” and the "Location History" setting was defaulted to “off”. 

These default settings meant that Google LLC could collect, store and use personal location data when a user was using various apps, including Google services such as Google Maps. 

The crux of the ACCC’s case was the contention that there were users who were misled or likely to have been misled by what was, and what was not, stated or shown on various relevant screens on the users’ devices; in other words, there were users who, acting reasonably, would have thought that, with the "Location History" setting switched “off”, Google LLC would not obtain, retain and use personal data about their location, and that this was not relevantly changed by the fact that the "Web & App Activity" setting was switched “on”.

Following the hearing on liability, the Federal Court of Australia held that Google contravened the Australian Consumer Law by:

• misrepresenting that the "Location History" setting was the only setting which affected whether Google collected, kept or used personally identifiable data about user location;
• failing to inform consumers that by switching off the "Location History" setting on their Android device but leaving the "Web & App Activity" setting switched on, Google would continue to collect, store and use their personally identifiable location data;
• failing to inform consumers that their location data would be retained and subsequently used.

Penalty Decision

In the penalty judgment handed down on 12 August 2022, the Court considered the proposed A$60m penalty against the backdrop of the three key contraventions:

•  "Setup Contraventions", being implied representations made to certain users relating to the effect of the Location History setting on Google’s collection and use of personal data about the user’s location;
• "LH Contraventions", being implied representations to certain users that by turning the "Location History" setting “off”:
  • Google would not be able to obtain, retain or use location data; or
  • Google would continue to be able to obtain and use location data when the user was using a Google product or service, but Google would not be able to retain data so obtained or later use that data; 
•  "WAA Contraventions" being implied representations to some users that having the Web & App Activity" setting turned “on” would not allow Google to obtain, retain or use personal data about the user’s location.

In determining whether the agreed penalty of A$60m is appropriate, the Court adopted the "course of conduct" principle by treating the multiple contraventions by Google as being sufficiently closely related with a view to fixing a fair and reasonable penalty appropriate to achieving the objective of deterrence.

After considering the mandatory factors under section 224(2) of the Australian Consumer Law and those set out in Australian Competition and Consumer Commission v Woolworths Limited [2016] FCA 44, the Court agreed with the parties' submission that a penalty of A$60m would be appropriate, comprising:

• Setup Contraventions: $10 million;
• LH Contraventions: $10 million; and
• WAA Contraventions: $40 million.

Key Takeaways

• The Australian Consumer Law has extra-territorial effect and applies to foreign-incorporated businesses (such as Google LLC, for example) which conduct business in Australia. 
• We expect to see penalties imposed by Courts for contraventions of the Australian Consumer Law to grow, given the maximum statutory penalty was increased in September 2018 to the greater of (a) A$10 million, (b) three times the value of any benefit obtained or (c) if the value cannot be determined, 10 per cent of the defendant's turnover. Whilst the A$60m penalty imposed on Google is significant, it is worth noting that the majority of Google's conduct occurred before the maximum penalty was increased.
• This is the ACCC's first public enforcement action following its Digital Platforms Inquiry which concluded on 26 July 2019.  Given the ACCC's compliance and enforcement priorities for 2022-23 expressly includes "competition and consumer issues relating to digital platforms", this action is a shot across the bows that the ACCC will continue to focus on digital platforms and any potential contraventions by them of the Australian Consumer Law.
• This decision reinforces the notion that personal data (including personal location data) are highly sensitive and commercially valuable. This case highlights the importance for businesses to ensure that clear disclosures are made to customers regarding the collection, storage and use of personal data so as to mitigate the risk of contravening the Australian Consumer Law.