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What will the unauthorized cookies scandal cost Google?

The discovery that Google has been tracking the Web activity of iPhone and iPad users on Safari without permission has the company in hot water and could end up costing it, both in terms of its reputation as well as monetarily.

The issue came to light last week when a Stanford University researcher?s study found that Google?s DoubleClick and three other advertising companies - Vibrant Media, WPP's Media Innovation Group and Gannett?s PointRoll ? have been circumventing a privacy setting in the Safari browser that blocks third-party cookies, which are used to track users? activities as they surf the Web. Safari is the main browser on the iPhone and iPad.

?There is a pattern to Google's continued collection of user data, and then claiming it was an error,? said Jeffrey Chester, executive director of the Center for Digital Democracy, Washington. ?There was Google WiSpy, then Buzz, and now Safari.

?Daily headlines of privacy violations are fueling calls for stronger regulation, especially from the EU,? he said.

?Consumer confidence in Google, especially as it grows its mobile and location business, is being harmed. Why should a consumer trust that a Google Wallet won't share their financial data with others??

Privacy infractions keep coming
This is just the latest scandal involving mobile and consumer privacy. Last week Apple was the focus of concern over how some mobile applications on iOS are collecting and keeping users? mobile contact lists.

In an official statement, Google senior vice president of communications and public policy Rachel Whetstone said that Google?s activities are being mischaracterized and that the Safari browser contained functionality that enabled Google advertising cookies to be set.

?We didn?t anticipate that this would happen, and we have now started removing these advertising cookies from Safari browsers,? Ms. Whetstone said. ?It?s important to stress that, just as on other browsers, these advertising cookies do not collect personal information.?

However, privacy groups think it is unlikely that Google was not aware of what was happening.

Whether it knew what was going on or not, it could still be subject to significant fines for the activity.

?These guys are sophisticated engineers,? said John M. Simpson, privacy project director at Consumer Watchdog, Santa Monica, CA. ?They had to know that cookies were going to be set and that they were going to see results from them.

?If they went into not anticipating that it would happen and it happened, then they should have stopped it,? he said.

?They are very likely going to be subject to $16,000 per violation per day. I think they are in deep deep trouble here and deservedly so.?

Google takes the heat
While four companies were found to have been participating in the unauthorized tracking, privacy groups and others are singling out Google because it has a history of getting into trouble over privacy issues.

Earlier this month, European governments asked Google to stop previously announced changes in its privacy policies to give them time investigate the implications. The changes would, among other things, enable Google to use information shared on one Google service in other Google services for people logged into a Google account.

Google responded by saying it would answer any questions but did not indicate it would delay the changes.

In the latest scandal, privacy groups are accusing Google of lying to users and asking the Federal Trade Commission to take immediate action against the company.

?Google's culture and business model is to collect as much data for marketing as possible,? Center for Digital Democracy?s Mr. Chester said. ?With new threats from Facebook, Google is expanding how much data it collects and users for targeting.

?Google's recurring privacy problems reflects a problem with top leadership - employees haven't yet gotten the message that privacy is really important to the company.?

Saving face
If Google is to save face with consumers and regulators, it may need to take some drastic action.

A good place for the company to start would be to back Do Not Track, which would provide users with a single, simple, persistent choice to opt out of third-party Web tracking.

?I think if they are sincere about people?s privacy and are not just paying lip service to the idea, they need to take strong action to actively support a Do Not Track mechanism that would work in desktop and mobile environments,? Consumer Watchdog?s Mr. Simpson said.

However, it may already be too late to avoid some kind of regulator backlash.

?I think that here is tremendous and growing concern in the population in general about what is going on online - it is has been one shock after another,? Mr. Simpson said.

?Because of these high profile incidents, you are going to see more and more intense scrutiny,? he said.

?People are really upset about the high-handed approach these companies are taking toward privacy. There are not many bipartisan issues in Washington these days but privacy is perhaps emerging as one and we may actually see some serious legislation passed.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York