Data Privacy Lawsuit Results in Google Paying $350 Million Settlement

Google agreed to pay $350 million to settle a shareholder lawsuit over a security flaw at its now-defunct Google+ social media website.

The tentative settlement was filed late Monday in federal court in San Francisco after more than a year of mediation and requires the approval of U.S. District Judge Trina Thompson.

It settles claims that Google learned by March 2018 of a three-year-old software flaw that exposed Google+ users’ personal data, but kept the problem under wraps for months and publicly emphasized its commitment to data security.

Shareholders said Google feared that disclosing the data would subject it to regulatory and public scrutiny, as Facebook faced after London-based Cambridge Analytica harvested its users’ data during the 2016 election.

According to the complaint, shares of Google’s parent company, Alphabet, fell several times after news of the error broke, wiping tens of billions of dollars off the market value.

The lawsuit, led by Rhode Island Treasurer James Diossa on behalf of the state pension fund that owns Alphabet shares, covers Alphabet shareholders from April 23, 2018 to April 30, 2019.

Google denied wrongdoing in the settlement and found no evidence of data misuse.

Spokesman Jose Castaneda said: “We regularly identify and fix software issues, disclose information about them, and take these issues seriously. This issue concerns a product that no longer exists and we are glad to have it resolved.”

The Mountain View, California-based company reached a related $7.5 million settlement with Google+ users in 2020.

In 2020, another judge had dismissed the shareholders’ case, but the US Ninth Circuit Court of Appeals revived it in 2021.

“Most people thought no one would get a dime back in this case, and when the first judge granted Google dismissal, ‘I told you so’ fell on deaf ears,” said Jason Forge, a partner at Robbins Geller Rudman & Dowd, who represents the shareholders. “It just made Rhode Island and us more determined.”

According to court documents, attorneys for the shareholders could seek up to $66.5 million in fees from the settlement.

Monday’s settlement was announced 5-1/2 weeks after Google settled a lawsuit alleging it secretly tracked the Internet use of millions of people who thought they were browsing privately. The terms of the settlement have not yet been announced.

In re Alphabet Inc Securities Litigation, US District Court, Northern District of California, No. 18-06245.