Google Gets Smacked with Microsoft and Apple Complaints Over Browser Privacy

by Trefis Team
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Google (NASDAQ:GOOG) is facing another privacy complaint about circumventing privacy settings for Apple’s (NASDAQ:AAPL) Safari browser, and Microsoft (NASDAQ:MSFT) has now alleged the same issues apply to its Internet Explorer (IE) browser. [1] This could be the start of more legal troubles for Google, with three U.S. lawmakers pushing for another Federal Trade Commission (FTC) investigation into the company’s operations. [2] The repercussions of any such investigation could have a significant impact on Google’s advertising revenues if, given that browsers like Safari have millions of users.

See our full analysis for Google’s stock

“Do No Evil”: Does That Really Apply Anymore?

It is alleged that Google’s tracking system used loopholes within browsers like Safari to track a user’s browsing history even if they have disabled it. The default privacy protocols on web browsers like Safari and IE typically prevent small files known as “cookies” from being installed, which in turn safeguard any tracking by external ads. Google allegedly circumvents this protection by relying on “exceptions” to this rule, namely any website with which a user interacts with himself/herself. The company seems to have added specific coding that makes users unknowingly interact with such a site, and this results in the installation of the cookie. The Wall Street Journal was the first to report this incident and you can read more about it here, and discloses that this code was removed after the WSJ contacted Google about it.

A public relations mishap aside, this development could hamper Google’s mobile ambitions, especially given that Safari commands a +50% market share in the mobile browser space. This could lead to mistrust among users as well as a possible legislation that bans such circumvention of browser privacy, either of which would mean a reduction in the potential reach of Google’s advertisements. Not to mention, other leading browsers like the Opera Mini may also come up with similar allegations against the search giant.

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We currently have a price estimate of near $627 for Google’s stock, which is roughly 4% above the current market price.

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Notes:
  1. Google Bypassing User Privacy Settings, IEBlog, 21st Feb 2012 []
  2. U.S. Lawmakers Call on FTC to Investigate Google Over Safari Cookies, PC World, 20th Feb 2012 []
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