Online Powerhouses – Too Big to Sue?

Online Powerhouses – Too Big to Sue?

Online Powerhouses – Too Big to Sue?

Internet privacy is not just under siege from the NSA. Google is fighting two huge class action suits based upon privacy violations. Facebook recently settled two privacy-based class action lawsuits. These lawsuits are colossal because Google and Facebook are two mammoth companies with enormous numbers of customers. One class is comprised of everyone who has a Gmail account or sent a message to a GMail account over the last two years. How huge is that? The last time Google released the number of Gmail accounts was in June, 2012: 425 million worldwide. I’ve opened two myself since then.  But that’s only the number of Gmail accounts and doesn’t include everyone sending messages to Gmail accounts. Facebook boasts over 1 billion users. We mean huge.

Facebook-legal

(Image Source: Shutterstock)

The second Google case is In re Google Street View Electronic Communications Litigation. This class is every person in the US whose home WiFi Google tapped to perform its street view mapping. No one knows how many people that is, but it could be in the millions.

While lawyers typically look for moneyed defendants, the problem with lawsuits of this magnitude is that each privacy violation has a statutory penalty of up to $10,000 under the Wiretap Act. When the class of plaintiffs is so large, the penalties rapidly hit billions or even trillions of dollars – that is if every class member decides to participate.

So what does this really look like? Facebook lucked out on its class action, Fraley v. Facebook, when the judge approved a settlement in August to pay each class member $15. The potential class included 150 million users but only 615,000 filed claims. Facebook paid $20 million into a settlement fund with $9,225,000 going to class members; $5,000,000 to Internet privacy watch dog groups, called cy pres awards; and $3.5 million in attorneys’ fees. So Facebook is lucky because $20 million is far less than $2.25 billion (150 million members x $15). If each class member got $1,000, more would likely have signed up and well, you can do the math.

Facebook managed to settle its next class action on the Beacon program (Let’s broadcast details about our users’ personal lives!) with a $6 million cy pres award to a privacy group Facebook controls. Clearly Facebook thought it “cracked the code” on managing its privacy problems but the case is being appealed. And what’s more, settling class actions with cy pres awards in lieu of compensating individuals is now losing favor in the 9th Circuit where Google and Facebook live.

The Google cases have been progressing through the litigation process with the plaintiffs largely winning. Even with gross revenues of $50 billion in 2012, awarding significant damages to each class member would likely bankrupt Google, leaving the claimants without payments and hundreds of millions without services.

Some commentators are arguing that the suits are “Too Big to Settle”. In the class action world, once the class is certified by the court, settlements are very difficult. What usually happens is that prior to certification, the parties come up with their proposed settlement and present it to the court for approval. Once the class is certified, it’s up to the court to define the award. If the court won’t accept a cy pres award and applies statutory damages to each class member, we are looking at staggering judgments.

It’s reminiscent of the “Too Big to Fail” arguments of the big banks and auto companies. But do they warrant it? However you feel about class action suits, shouldn’t Google and Facebook be held accountable for privacy violations even though they are so large – or because they are so large? Would the impact of Google’s or Facebook’s demise be similar to bringing down the banking system or the auto industry? Or would the Internet ecosystem hiccup and move on?

The U.S. Supreme Court should announce if they will take the appeal of the Beacon Facebook class action and its cy pres award on Monday. Any bets?

By Cindy Wolf

Cindy is a Colorado lawyer with more than 25 years experience representing large and small domestic and multinational companies. Her expertise is in helping companies enter the cloud safely, either as providers or users. She also practices in the areas of corporate law and commercial contracting, with an emphasis on international issues. She can be reached at cindy@cindywolf.com. 

(Note: This publication is provided for informational purposes only. It does not constitute legal advice. There is no implicit guarantee that this information is correct, complete, or up to date. This publication is not intended to and does not create an attorney-client relationship between you and the author.)

About CloudTweaks

Established in 2009, CloudTweaks is recognized as one of the leading authorities in connected technology information and services.

We embrace and instill thought leadership insights, relevant and timely news related stories, unbiased benchmark reporting as well as offer green/cleantech learning and consultive services around the world.

Our vision is to create awareness and to help find innovative ways to connect our planet in a positive eco-friendly manner.

In the meantime, you may connect with CloudTweaks by following and sharing our resources.

View All Articles

Sorry, comments are closed for this post.

Comic
Building a Data Security Strategy – More Important Than Ever

Building a Data Security Strategy – More Important Than Ever

Data Security Strategy Article sponsored by SAS Software and Big Data Forum Security and privacy have been an integral concern of the IT industry since its very inception, but as it expands through web-based, mobile, and cloud-based applications, access to data is magnified as are the threats of illicit penetration. As enterprises manage vast quantities…

Pitney Bowes Selects Aria Systems for Billing on the New Commerce Cloud

Pitney Bowes Selects Aria Systems for Billing on the New Commerce Cloud

Top-Ranked Cloud Billing Company Enables Greater Speed and Frictionless Billing for Unparalleled Customer Experience San Francisco, CA – August 23, 2016 – Aria Systems, which helps enterprises grow subscription and usage-based revenue, today announced that Pitney Bowes has selected Aria’s cloud-based monetization platform as the key billing and monetization component of their new Commerce Cloud…

The Golden Age of Wearable Technology

The Golden Age of Wearable Technology

The Golden Age One of the biggest fads in the technology sector right now is wearable tech. From Smartwatches that let you check your emails, chat with friends and search the web, to fitness accessories that monitor your heart rate and your sleep patterns, this is truly the Golden Age of wearable technology. But some…

Marketing Execs Beefing Up on Martech Strategies

Marketing Execs Beefing Up on Martech Strategies

Martech Strategies As budgets shift from traditional marketing streams to marketing technology, it’s essential that both marketers and business leaders understand marketing technology and keep up with the developments. According to eMarketer, 78% of US senior marketers surveyed believe gaining this understanding of marketing technology is increasingly relevant to their success, and the majority of…

4 Monetization Models For The Digital Business Era

4 Monetization Models For The Digital Business Era

4 Monetization Models Digital business is expected to generate billions in new revenue in the next four to five years. However, MGI Research predicts that digital businesses will need to increase their time to market by 40 percent. Many global executives admit they are unprepared to monetize their operations. The million dollar question is: how…

Despite Record Breaches, Secure Third Party Access Still Not An IT Priority

Despite Record Breaches, Secure Third Party Access Still Not An IT Priority

Secure Third Party Access Still Not An IT Priority Research has revealed that third parties cause 63 percent of all data breaches. From HVAC contractors, to IT consultants, to supply chain analysts and beyond, the threats posed by third parties are real and growing. Deloitte, in its Global Survey 2016 of third party risk, reported…

Rounding Out Your Security Strategy With The Enterprise Cloud

Rounding Out Your Security Strategy With The Enterprise Cloud

Enterprise Cloud Security Strategy No company wants to be the one to have to announce one of the world’s biggest data breaches. From managing networks and datacenters to protecting hundreds of applications, today’s enterprises face enormous challenges. With all the surface area that needs to be tracked and protected including APIs on the front-end, customer integrations…

Four Recurring Revenue Imperatives

Four Recurring Revenue Imperatives

Revenue Imperatives “Follow the money” is always a good piece of advice, but in today’s recurring revenue-driven market, “follow the customer” may be more powerful. Two recurring revenue imperatives highlight the importance of responding to, and cherishing customer interactions. Technology and competitive advantage influence the final two. If you’re part of the movement towards recurring…

Choosing IaaS or a Cloud-Enabled Managed Hosting Provider?

Choosing IaaS or a Cloud-Enabled Managed Hosting Provider?

There is a Difference – So Stop Comparing We are all familiar with the old saying “That’s like comparing apples to oranges” and though we learned this lesson during our early years we somehow seem to discount this idiom when discussing the Cloud. Specifically, IT buyers often feel justified when comparing the cost of a…

How To Humanize Your Data (And Why You Need To)

How To Humanize Your Data (And Why You Need To)

How To Humanize Your Data The modern enterprise is digital. It relies on accurate and timely data to support the information and process needs of its workforce and its customers. However, data suffers from a likability crisis. It’s as essential to us as oxygen, but because we don’t see it, we take it for granted.…

The Global Rise of Cloud Computing

The Global Rise of Cloud Computing

The Global Rise of Cloud Computing Despite the rapid growth of cloud computing, the cloud still commands a small portion of overall enterprise IT spending. Estimates I’ve seen put the percentage between 5% and 10% of the slightly more than $2 trillion (not including telco) spent worldwide in 2014 on enterprise IT. Yet growth projections…

The Storytelling Machine: Big Content and Big Data

The Storytelling Machine: Big Content and Big Data

Bridging The Gap Between Big Content and Big Data Advances in cloud computing, along with the big data movement, have transformed the business IT landscape. Leveraging the cloud, companies are now afforded on demand capacity and mobile accessibility to their business-critical systems and information. At the same time, the amount of structured and unstructured data…

How Your Startup Can Benefit From Cloud Computing And Growth Hacking

How Your Startup Can Benefit From Cloud Computing And Growth Hacking

Ambitious Startups An oft-quoted statistic, 50% of new businesses fail within five years. And the culling of startups is even more dramatic, with an estimated nine out of ten folding. But to quote Steve Jobs, “I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.” So while…

Protecting Your Web Applications In A Hybrid Cloud Environment

Protecting Your Web Applications In A Hybrid Cloud Environment

Protecting Your Web Applications It’s no secret that organizations are embracing the cloud and all the benefits that it entails. Whether its cost savings, increased flexibility or enhanced productivity – businesses around the world are leveraging the cloud to scale their business and better serve their customers. They are using a variety of cloud solutions…

Who’s Who In The Booming World Of Data Science

Who’s Who In The Booming World Of Data Science

The World of Data Science The nature of work and business in today’s super-connected world means that every second of every day, the world produces an astonishing amount of data. Consider some of these statistics; every minute, Facebook users share nearly 2.5 million pieces of content, YouTube users upload over 72 hours of content, Apple…

15 Cloud Data Performance Monitoring Companies

15 Cloud Data Performance Monitoring Companies

Cloud Data Performance Monitoring Companies (Updated: Originally Published Feb 9th, 2015) We have decided to put together a small list of some of our favorite cloud performance monitoring services. In this day and age it is extremely important to stay on top of critical issues as they arise. These services will accompany you in monitoring…