Google Burned By Partners To The Tune Of $22.5 Million

Hidden in Google's $22.5 million deal with the FTC to settle a Web-privacy failure involving Apple users is a reminder to online retailers about just how messy the E-Commerce game is: Lots of players are involved in every transaction, and any one of them can change the rules at any time.

Sure, this fine is chump change to Google, few customers care much about privacy anyway and you're not Google. But the same dynamic could leave security holes in any E-Commerce site, especially because your carefully vetted procedures can get sidestepped as soon as an emergency fix is required—and any glitch qualifies as an emergency.

The deal, which has been finalized but still awaits approval by the five FTC commissioners, involves the biggest Web-privacy fine the agency has ever levied, according to a report in The Wall Street Journal on Monday (July 9). That's not saying much, because the FTC has only gone after a limited number of privacy violators (and it recently announced its first-ever effort to go to trial on a payment-card breach case). The problem: The FTC can't pursue actual privacy violations, only cases where a business fails to observe its own published privacy policy.

That's what got Google into this specific mess. The search giant had posted a privacy page in 2009 saying that it would respect the privacy settings of each user's browser. In 2010, after Apple—whose Safari is the only major browser that rejects third-party cookies by default—tweaked the way Safari handles cookies to make forms work better, some enterprising Google developers tweaked their own code to make Google's "+1" button work. That also opened a hole for third-party ad companies to put their own cookies on the Safari user's machine, which Google didn't spot and block.

Now count the players: Google, Apple, Google's developers and multiple third-party advertisers. Apple didn't trumpet its Safari changes; the advertisers didn't announce what they were doing. Google is the one with the published privacy policy, so it's the one the FTC went after. But the privacy breach never would have happened without Apple and the advertisers.

Online retailers have privacy pages, too, along with partners capable of making changes that open privacy holes. But you probably aren't much worried about the FTC (though maybe you should be, now that it's finally starting to show some teeth). Most customers care about privacy even less than they care about whether a retailer has had a payment-card breach—that just doesn't seem to change their store-going habits.

But the same dependencies that did in Google—those third-party connections and developer obliviousness—could hit chains much harder in an area they do care about: PCI.

Plan on using some vendor's cloud? It's probably not PCI-safe. You don't even know where the data actually resides, never mind how it's secured or what changes could be made on a moment's notice (or no notice at all).Think that keeping customer and payment-card data in-house but using the cloud for other projects will keep you safe when it comes to PCI and privacy? Don't be so sure. As Best Buy learned when its IT shop first discovered the cloud, the ease of starting a project in the cloud also means it's easy to avoid IT governance. Unless every developer, every business manager and every executive understands that card data in the cloud is strictly forbidden—no matter what—someone will decide it's safe enough for analyzing historical data or adding some quick capacity to deal with an E-Commerce site glitch.

Good luck keeping that sort of thing from happening on your cloud. Even better luck keeping it from happening if some clever business-side power user discovers he can extract CRM or POS data and rent cloud time on his own to crank it through a Hadoop application.

But you don't even need a cloud to get into trouble. Say some programmer has hacked together a workaround to solve a problem for a business unit or a partner—maybe it's as simple as using a cookie in an unusual way, because that's the quickest way to solve the problem. A few years later, your privacy policy has changed and now prohibits using that type of cookie. All the conventional cookie code has been disabled. But that unusual cookie code isn't where it's supposed to be, so it isn't found until some consumer privacy advocate stumbles upon it and raises a stink.

The more third parties, developers and users that have access to your systems—or support your E-Commerce site—the more complicated the problem is. It requires plenty of governance and discipline to keep everything inside the PCI- and privacy-safe bounds, even under normal circumstances. And even then, governance only helps going forward. Old patchwork will remain hidden until it surfaces to give you problems.

And then there are times that aren't normal—like any time your E-Commerce site staggers unexpectedly. Keeping the site up becomes the top priority of the E-Commerce operations team. The rules that don't go out the window can get very badly bent, especially if the crisis happens during a major sale or on Black Friday (ask Target how that comes down).

That's panic-mode time, when mistakes are easy to make, code reviews are minimal and IT governance is trumped by whatever works. Ironically, though it's hard to backtrace everything that's done to keep a site up in a crisis, at least the post-crisis cleanup teams know they're looking for potential problems. It's much harder to find the old, one-off workarounds that are problems waiting to happen.

The "correct" answers—governance, discipline, communication—still only go so far. As Google discovered, you can actively watch out for those messy, unsignaled side effects—but you still have to be prepared to get the bad news.