Google, a business unit of Alphabet Inc. (GOOGL), was handed a fine of $57 million by France’s data-privacy agency, CNIL, for violating Europe’s General Data Protection Regulation (GDPR) rules. The agency said Google was vague about its data collection methods and also failed to take clear consent from users for advertising purposes.
According to the regulators, Google did not give its users adequate information on how their personal data was collected and how it was being used. The company also reportedly did not gain explicit consent from users before targeting them with customized advertisements.
The GDPR laws require that technology companies make it as simple as possible for users to understand how their data is being collected and used and to provide consent for such collection. Users should also be able to know how their data is being used.
However, Google failed on both these grounds. The details of Google’s data collection and usage are too complicated for users to understand and this complication is worsened by the company’s wide range of services. Google’s privacy settings and its terms and conditions do not provide users with enough flexibility or options to tackle the issue of data privacy.
This marks a major penalty against a US company by the EU under GDPR rules and it is possible that Google will appeal this decision. Some consumer groups feel the current penalty is not big enough considering Google’s annual revenue and believes a deeper probe into the company’s actions could cause the fine to amount to billions of dollars.
Google is not alone. Several of its peers including Amazon (AMZN) and Apple (AAPL) have been accused of violating GDPR laws. The GDPR rules have led many leading tech companies to update their policies or face hefty fines. The US lacks a GDPR equivalent and lawmakers have been calling for similar regulations to be passed in the country making tech companies more accountable.
Although it remains to be seen what the final outcome of these decisions will be, the fines are likely to take a meaningful toll on the earnings of the tech companies. Alphabet’s shares were down 1.2% in morning hours on Tuesday.