Peering into Google’s state of mind: Potential penalties in the ACCC’s location data misleading and deceptive conduct case

The Australian Competition & Consumer Commission (ACCC) and Google are contesting the penalties that will be imposed on Google for breaching the Australian Consumer Law in relation to its location data collection practices. The Federal Court has recently determined that the ACCC may discover documents relevant to Google’s state of mind for the purposes of those penalty proceedings.

Finding of liability for misleading and deceptive conduct

In April 2021, the Federal Court of Australia found that Google had engaged in misleading and deceptive conduct in relation to information it provided to Australian consumers about the location data that Google collected through its “Location History” and “Web & App Activity” settings on Android operating system smartphones.¹ The Court concluded that a certain class of consumers were misled by Google into believing that, with the Location History setting turned off, their location information would not be collected by Google. This was not the case. In fact, Google continued to collect information about users’ location through the Web & App Activity setting unless that separate setting was also turned off.

Discovery process for penalties hearing

The April 2021 decision related only to the issue of liability, not penalties. At the time of commencing the proceedings, the ACCC indicated it would seek not only monetary penalties but also declarations, orders requiring the publication of corrective notices and the establishment of a compliance program. The parties have been unable to reach an agreement on this range of penalties, so that question will be determined by the Federal Court.

For the purposes of the penalties hearing, the ACCC has sought discovery from Google. A dispute regarding the documents to be provided by Google was recently heard before the Federal Court. The Federal Court has broadly described the disputed categories of documents the ACCC sought in discovery as “knowledge categories”. Documents in the knowledge categories might establish Google’s state of mind as relevant to its misleading and deceptive conduct. 

Relevance of Google’s state of mind

In his decision of 16 August 2021,² Justice Thawley ordered discovery of the knowledge categories of documents. These primarily consist of documents related to internal Google meetings held in the aftermath of an Associated Press article which publicly revealed the location data collection practices that would later form part of the basis of the ACCC’s complaint against Google. The meetings included an internal meeting referred to by Google as the “Oh Shit” meeting as well as subsequent meetings between the senior leadership team and Google’s CEO, Sundar Pichai.

The Federal Court held:

• Google’s state of mind is relevant to the question of penalties in a number of ways. Although knowledge of confusion is not sufficient to establish liability for misleading and deceptive conduct, such knowledge is relevant in determining penalties. As noted by Justice Thawley:³

“All other things being equal, the relief might be different in respect of companies A and B where company A knew its product caused confusion in a way or for reasons relevant to the specific contraventions and chose to do nothing about it for reasons of commercial convenience, but company B was unaware of any such confusion.”

• The determination of liability is separate from the determination of penalties. Even though the ACCC did not argue that Google had intentionally engaged in the misleading and deceptive conduct in its case on liability, this did not mean the ACCC could not raise arguments as to Google’s state of mind in relation to the appropriate penalties. In particular, it would be appropriate to take into account whether the conduct was systematic and deliberate in determining penalties, as well as the corporate level at which the conduct occurred.

What will be revealed about Google’s state of mind?

The need for Google to provide discovery of these “knowledge categories” documents will delay the hearing on penalties, which had been scheduled for September 2021. A new hearing date has not yet been set. When that hearing does occur, the ACCC is likely to be able to provide evidence of Google’s state of mind at the highest corporate level. This will provide interesting insights that are likely to be watched globally, including in the US, given numerous other entities have also commenced proceedings against Google in relation to its location data collection practices.

¹ Australian Competition and Consumer Commission v Google LLC (No 2) [2021] FCA 367.
² Australian Competition and Consumer Commission v Google LLC (No 3) [2021] FCA 971.
³ At paragraph 12 of the judgement.

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

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