Google’s $425 Million Privacy Verdict: Lessons for Business Owners

By Ramyar Daneshgar
Security Engineer | USC Viterbi School of Engineering

Disclaimer: This article is for educational purposes only and does not constitute legal advice.

Executive Summary

In September 2025, a federal jury in San Francisco ordered Google to pay $425 million in damages for violating user privacy. The class action, filed in 2020, alleged that Google collected and stored personal data from nearly 100 million users despite users turning off the Web & App Activity setting. The case is one of the largest U.S. privacy verdicts to date, and it shows how quickly courts are shifting from treating privacy violations as abstract risks to imposing direct, measurable costs on companies.

The ruling underscores three critical lessons:

1. A privacy setting is only credible if it works exactly as users believe it does.
2. Liability extends through vendor and partner ecosystems.
3. Financial exposure for mismanaging privacy now spans hundreds of millions of dollars, even absent data breaches or intentional misconduct.

For business owners, this case should not be dismissed as a “Google problem.” Instead, it serves as a blueprint for what plaintiffs’ attorneys, regulators, and courts will scrutinize when evaluating a company’s handling of customer data.

The Case at a Glance

• Damages: $425 million awarded to users.
• Scope of Class Action: 98 million users and 174 million devices.
• Claims: Google continued to collect user data after individuals turned off Web & App Activity - a setting that promised to halt such collection.
• Plaintiffs’ Argument: Users were misled into believing data collection had stopped. The company’s integrations with popular apps such as Uber, Venmo, Amazon, and Instagram amplified the scale of violations.
• Defense: Google maintained that the collected data was non-personal, pseudonymous, encrypted, and stored separately. They argued that it could not be linked back to individuals.
• Outcome: The jury sided with users on two of three privacy claims. While it did not find Google acted with malice (which spared the company punitive damages), the damages imposed were still significant.

This result is notable because it shows courts are no longer swayed by arguments that “technical safeguards” make data collection acceptable. What mattered was whether user expectations were honored.

Why This Matters for Businesses

1. Privacy Assurances Must Match Reality

The crux of the case was the gap between what users were told and what actually happened. Users believed turning off Web & App Activity would stop data collection. In practice, data continued flowing through background integrations.

Courts took a plain-language approach: if the average consumer interprets a setting to mean “stop tracking,” then the business is legally bound to honor that interpretation. Technical qualifications - such as pseudonymization - did not shield Google from liability.

Implication for Businesses:

• If you advertise a privacy control, it must do exactly what customers think it does.
• “Dark patterns” or vague wording in privacy policies are increasingly risky.
• Regulators and juries will interpret settings through the lens of consumer expectations, not the company’s internal definitions.

2. Third-Party Integrations Expand Liability

The lawsuit showed how Google’s data collection extended beyond its own ecosystem. Data continued to flow through integrated third-party applications, from ride-hailing services to e-commerce giants.

This matters because many businesses outsource analytics, advertising, and cloud services. When those vendors continue collecting data in ways inconsistent with your stated policies, you remain accountable.

Implication for Businesses:

• Vendor contracts must include clear obligations for compliance with your privacy promises.
• Conduct technical audits of how vendors use and store data.
• Recognize that plaintiffs’ attorneys will treat vendor misconduct as part of your company’s legal exposure, not as a separate issue.

3. Regulatory and Legal Risk Is Escalating

This is not Google’s first privacy case. In 2024, the company paid $1.4 billion to Texas to settle state privacy claims and agreed to destroy billions of records related to private browsing. This pattern demonstrates the growing readiness of both states and courts to impose large-scale penalties even without traditional data breaches.

What makes the $425 million verdict different is that the harm was based on misrepresentation and misuse of privacy settings rather than a cyberattack or data exfiltration. For businesses, this expands the scope of risk. A breach is no longer necessary for massive financial exposure.

Implication for Businesses:

• Expect more class actions under state-level privacy laws (CCPA/CPRA, Texas Data Privacy and Security Act, etc.).
• Prepare for litigation even when systems are secure but privacy promises are overstated or misleading.
• Understand that plaintiffs’ attorneys are increasingly creative: mislabeling a toggle switch can now cost as much as a breach of sensitive records.

Practical Steps for Business Owners

1. Audit and Validate Privacy Tools
   • Test every opt-out function, toggle, and preference center. Confirm they operate exactly as users expect.
   • Have independent teams or auditors simulate user experiences rather than relying solely on internal engineers.
2. Strengthen Vendor Oversight
   • Review all data-sharing agreements with partners and analytics providers.
   • Insert contractual requirements that vendors honor customer opt-outs and provide compliance attestations.
   • Conduct annual audits of vendor compliance, especially if they process customer behavioral data.
3. Improve Privacy Documentation
   • Maintain detailed logs showing when and how privacy settings were tested.
   • Document the technical design of each privacy control to demonstrate good-faith compliance.
4. Adopt Plain-Language Policies
   • Replace vague terms like “may collect” or “limited data” with precise descriptions of what data is collected and why.
   • Use language that a non-technical customer can reasonably understand.
5. Plan for Litigation and Enforcement
   • Treat privacy compliance as part of risk management, not just IT.
   • Train executives and managers on how to respond to subpoenas, regulatory inquiries, or class action filings.
   • Establish a litigation response fund in budgets, recognizing that privacy claims are now an operational certainty for data-driven businesses.

Closing Note

The $425 million verdict against Google should serve as a cautionary tale. Courts are now treating privacy settings as binding commitments, not optional features. Business owners who believe only “big tech” is vulnerable are overlooking the reality: the same principles apply to companies of every size that collect, store, or share user data.

The lesson is straightforward but urgent. Align your privacy practices with your promises, monitor your vendors as if regulators are watching, and never assume that technical jargon will shield you from accountability. In today’s climate, trust is not just a reputational asset—it is a legal obligation with a price tag measured in hundreds of millions of dollars.