Google's $8.5m class-action privacy payout goes to: Lawyers' alma maters, web giant's pals

Basically: Not you, just 'the usual suspects'

The US Ninth Circuit Court of Appeals has narrowly approved an $8.5m Google payout for privacy violations following a lengthy argument over who should receive the money.

Despite the class-action lawsuit being brought on behalf of roughly 129 million folks in the US who Googled between 2006 and 2014, none of the money will actually go to them but will instead be split between the attorneys and organizations they have designated.

It just so happens that, as part of a settlement, three of those seven "cy pres recipients" are the alma maters of the attorneys: cash-strapped Harvard University, Stanford University and the Chicago-Kent College of Law.

The others named in the settlement are AARP Inc, Carnegie Mellon University, the MacArthur Foundation and the World Privacy Forum – all of whom are frequent recipients of Google's corporate largesse.

The proposed provision of funds has repeatedly fallen foul of the judges in charge of the case. Back in 2014, US District Judge Edward Davlia complained about the disbursement: "The elephant in the room is that many of them are law schools that you attended," he said, adding, "I'm disappointed that the usual suspects are still usual."

In case you are wondering how those organizations were chosen, you're not the only one. Davlia noted the complete lack of transparency over where the $6.5m not being awarded to the lawyers was going, and said it "raises a red flag" and "doesn't pass the smell test."

The case

The actual case and settlement is over Google violating users' privacy by revealing their search terms to third-party websites. The search terms included things like people's real names, addresses, and credit card numbers.

But when Google agreed to settle the case – handing $2.1m to the attorneys and $6.5m to the "cy pres recipients" – both sides agreed it was not possible to provide that money to actual Google users because all of them would have to "get something" for it to be a legitimate settlement. The settlement amount per user would be roughly five cents (the lawyers claim four cents) and there would likely be huge distribution and advertising costs in getting it to people.

That explanation, and the final recipients, have been repeatedly questioned, however.

Ted Frank of the Competitive Enterprise Institute attended the most recent hearing and argued that there was a clear conflict of interest in attorneys listing their alma maters as recipients. He argued that the money should be given to charities rather than extremely wealthy universities.

And by arguing that it wasn't possible to pay any money to users because it was an all-or-nothing situation where every user would have to get something, Frank argued that the case could effectively undermine every future consumer class action lawsuit and funnel hundreds of millions of dollars to organizations chosen by lawyers.

Other groups also opposed the agreement. The Electronic Privacy Information Center and Consumer Watchdog complained that Google users will get nothing and the settlement money would have no impact on Google's behavior because the amount was so small compared to its revenues and profits.

The lawyers' arguments for the recipients that they and Google's lawyers had chosen were that each of them works on privacy issues and each will track how the money is spent. So a degree of transparency is included. That transparency argument was what sparked Judge Davila to note that it didn't "pass the smell test."

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