NEW YORK: Google has reached a settlement agreement of $350 million to resolve a lawsuit filed by shareholders concerning a security flaw discovered on its now-defunct social media platform, Google+.
The initial settlement was filed in San Francisco federal court on Monday, following over a year of mediation. The agreement is subject to approval by US District Judge Trina Thompson.
The lawsuit stems from allegations that Google became aware of a software glitch in Google+ by March 2018, which exposed users’ personal data for a period of three years. Despite this knowledge, Google purportedly delayed disclosing the issue for several months, while publicly emphasizing its commitment to data security.
Shareholders argued that Google refrained from disclosure due to concerns that it would face regulatory and public scrutiny similar to Facebook’s experience with the Cambridge Analytica scandal during the 2016 US elections.
According to the complaint, the news of the security flaw caused fluctuations in Alphabet’s stock price, resulting in significant losses of market value amounting to tens of billions of dollars.
Google Settles Data Privacy Lawsuit with Shareholders
The lawsuit, led by Rhode Island Treasurer James Diossa on behalf of a state pension fund holding Alphabet stock, covers shareholders from April 23, 2018, to April 30, 2019. Google, while settling, denied any wrongdoing and found no evidence of data misuse.
Jose Castaneda, a spokesperson for Google, stated, “We regularly identify and fix software issues, disclose information about them, and take these issues seriously. This matter concerns a product that no longer exists, and we are pleased to have it resolved.”
The settlement follows a related $7.5 million agreement reached by Google with Google+ users in 2020. Initially dismissed by a judge in 2020, the shareholder case was reinstated by the 9th US Circuit Court of Appeals in 2021.
Jason Forge, a partner at Robbins Geller Rudman & Dowd representing the shareholders, commented, “Most people thought no one would recover a penny in this case… That just made Rhode Island and us more determined.”
As part of the settlement, lawyers representing the shareholders may seek up to $66.5 million in fees. The disclosure of Monday’s settlement comes shortly after Google settled another lawsuit involving the alleged tracking of internet usage by millions of people without their knowledge.
