Judge throws out Google privacy policy case, notes “users are the real product”

A federal court in California has again dismissed a class action lawsuit brought by Google(s goog) users who claimed the search giant broke the law when it combined the privacy policies of Gmail, YouTube and a variety of other services.

In a decision published Tuesday in San Jose, US Magistrate Judge Paul Grewal used frank language to shoot down the lawsuit:

“[He] must do more than point to the dollars in a defendant’s pocket; he must sufficiently allege that in the process he lost dollars of his own,” wrote Grewal, explaining that the users had failed to show that Google had harmed them in any meaningful way.

Grewal also noted that users in the Google case, and in a stack of similar cases over data privacy, faced a legal hurdle called “injury-in-fact” that the judge said could “reasonably be described as Kilimanjaro.”

In his ruling, the judge also refused to find Google liable for using its “+1” feature to display users’ endorsements in advertisements without permission. Grewal noted that the “+1” ads were exactly like Facebook’s “Sponsored Stories,” which resulted in a controversial $20 million settlement, but said Google did not violate the law because it had clearly obtained permission to use the endorsements. And, in a candid summary, the judge wrote:

“By now, most people know who Google is and what Google does. Google serves billions of online users in this country and around the world …  With little or no revenue from its users, Google still manages to turn a healthy profit by selling advertisements within its products that rely in substantial part on users’ personal identification information … in this model, the users are the real product.

One policy to rule them all

In their failed lawsuit, the Google users objected to the fact that the company had built a powerful data platform by combining various strands of their online habits — stretching from Gmail to YouTube to Android to Maps and more.

At the time, Google touted the decision as a “simpler, more intuitive user” activity and, as my colleague Derrick Harris explained, the move fulfilled Google’s internal vision of a unified platform.

The consolidation also produced complaints — like those presented in the lawsuit — that mingling all the data amounted to an invasion of privacy. So far, however, the move has not provoked a backlash from the courts or regulators and, indeed, Google appears to be pushing the issue even further with a new policy that gives it the right to use people’s faces in advertisements (here’s how to opt out).

In Europe, however, it has not been smooth sailing for Google and the new combined privacy policy. In November, a German court slammed the policy as too vague while Dutch authorities warned last week that “Google spins an invisible web of our personal data, without our consent.”

No going back?

The new California court ruling suggests that some judges are growing weary of the wave of privacy-related class actions directed at technology companies car_cliffand that, so long as the companies provide fair warning of what they’re doing, they will not be found to be breaking the law.

The new ruling could thus prove good news not just for Google but for other web giants like Facebook, which sweep a wide variety of services under a single privacy umbrella.

There is a potential dark cloud for the companies, however, in a separate series of privacy cases over Yahoo(s yhoo) and Google’s practice of scanning users’ emails to serve them ads; Judge Grewal, though, suggested in the new ruling that the companies’ email activities are acceptable since they are in the “ordinary course of business.”

You can read the new decision for yourself below (I’ve underlined some of the key bits). In it, Judge Grewal granted the plaintiffs one last chance to try again (this is their second try) by amending the claims.

Google Privacy Policy Ruling

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