Internet giant Google found itself in a middle of a potential public relations nightmare following a Wall Street Journal article this morning. Tentatively titled “Google’s iPhone Tracking,” the article asserts that “Google Inc. and other advertising companies have been bypassing the privacy settings of millions of people using Apple Inc.’s Web browser on their iPhones and computers” to follow iPhone users even after they explicitly set Safari’s privacy controls to disable such tracking. According to authors Julia Angwin and Jennifer Valentino-Devries, Google used “special computer code that tricks Apple’s Safari Web-browsing software into letting them monitor many users.” Google apparently disabled the problematic code after the newspaper contacted the Mountain View, Calif.-based Company.

Stanford researcher Jonathan Mayer discovered that although mobile Safari’s default setting blocks cookies from third parties and advertisers, Google and advertising companies Media Innovation Group, Vibrant Media, and Gannett PointRoll fooled mobile Safari into thinking “a person was submitting an invisible form to Google,” letting them in turn install a tracking cookie on users’ iPhones and PCs without consent.

Once a cookie installed, a Safari glitch allowed subsequent cookies to attach. Both Google and Apple issued statements following this morning’s report…

Apple told the Journal it is “working to put a stop” to the bypassing of Safari’s privacy settings. Google argued in a written statement to the newspaper that it “used known Safari functionality to provide features that signed-in Google users had enabled,” and it stressed “these advertising cookies do not collect personal information.” Marketing Land’s Danny Sullivan acknowledged that “Google and many others have figured out ways to get around Apple’s default settings on Safari in iOS,” arguing Apple is partly to blame as the browser “broke with common web practice.”

As a result, Google could exploit tricks to force advertising-tracking cookies upon iPhone users. Sullivan speculated Apple might have purposefully set default privacy settings in mobile Safari against third-party cookies to defend its own agenda, arguing Apple aims to own iPhone users and control their experience.

Apple, of course, operates its own advertising network built from a $275 million purchase of mobile advertising experts Quatro Wireless in 2010. Following the initial uptake, iAd lost share amid high commitments for mobile campaigns. Apple cut those commitments last February from $1 million to $500,000, then to $300,000 last July, and further down to as little as $100,000 this month. IDC estimated iAd’s 2011 mobile share of United States mobile display-ad revenue is at 15 percent versus 24 percent for Google’s AdMob and AdSense platforms, and versus 17 percent for mobile advertising company Millennial Media.

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