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Google Grapples With Lawsuit Related to User Privacy Concerns

Zacks Equity Research

Alphabet’s GOOGL division Google continues to grapple with legal hassles as it faces fresh allegations regarding privacy of the users.

A lawsuit of $5 billion has been filed in the federal court of San Jose, CA against the company for illegally tracking the Internet activities of users via the Incognito mode to collect data from their browsing sites and what they view online.

Notably, Incognito mode is known for allowing users to search through Google Chrome in private without getting their browsing history recorded.

By indulging in such unlawful actions, Google violated the federal wiretapping and California privacy laws.

The suit underlines the fact that the complaint was lodged by a proposed class of a zillion Google users who claimed that they have been using Incognito mode since June 2016 and fear being monitored.

Reportedly, the company practices data collection eve in private mode by using Google Analytics, Google Ad Manager, and other applications and website plug-ins.e

Alphabet Inc. Price and Consensus

Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

Impact on Google

Per its spokesperson, the company will try every trick in the book to fight this case of undue vigilance slapped on its name.

However, all accusations made by the proposed class do not bode well for Google.

If the company is  found guilty by the court of law, it will not only haveto shell out a hefty penalty but also end up tarnishing its brand image. According to the lawsuit, the company must pay damages worth $5,000 damage per user.

Google is already mired in legal troubles across several continents, which spoilt its reputation due to privacy concerns, anti-competitive issues, patent infringements, tax theft, and racial and gender discriminations.

Wrapping Up

The charges are disgraceful for a globally notable brand that apparently has always been vocal about its stand point to address privacy issues.

Google’s strong initiatives toward enhancing its search results and ensuring high security of data to its app and product users should not be ignored. Moreover, its growing endeavours to combat privacy breaches are appreciative.

To this end, the company recently decided to restrict third-party cookies in its Chrome web browser to ensure users’ privacy. It intends to accomplish the task of stopping advertisers from connecting their browser cookies to the non-operating websites within a couple of years. This move is in compliance with regulators who are strictly against sharing user data. Further, this reflects the company’s user-oriented focus.

Additionally, the company’s Privacy Sandbox project enables advertisers to display personalized ads without requiring users to disclose much of their personal data.

Further, it offers a Data and Personalization dashboard for users to track the information that is being shared.

All the aforementioned measures are likely to instill investor optimism on the stock.

Zacks Rank & Stocks to Consider

Currently, Alphabet carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Semtech Corporation SMTC, Inphi Corporation IPHI and Match Group, Inc. MTCH. While Semtech sports a Zacks Rank #1 (Strong Buy), Inphi and Match Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Semtech, Inphi and Match Group is currently pegged at 12.5%, 37.66% and 13.39%, respectively.

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