UPDATE 4-US ends inquiry on Google's Street View cars
* FTC says Google is improving privacy protection
* Google still faces other probes at home and abroad
* Analyst: FTC decision means "one less hassle" for Google (Adds statement from Connecticut's attorney general)
By Diane Bartz
WASHINGTON, Oct 27 (Reuters) - U.S. federal regulators have closed an investigation into Google Inc's (GOOG.O) "Street View" maps service, saying the company has taken steps to address privacy concerns raised by its improper collection of emails and other personal information.
The Federal Trade Commission said in a letter to Google on Wednesday that it was ending its probe with no penalties, a victory for the world's largest Internet company, though it still faces multiple privacy challenges abroad as well as from more than 30 U.S. state prosecutors.
Just this week, British regulators announced plans to make further inquiries and to consider whether to use enforcement powers after Google admitted that the WiFi-equipped vehicles it sends to take photographs for Google Maps had inadvertently also grabbed emails and passwords.
Britain's Information Commissioner's Office had said in August that it believed Google's cars were unlikely to have captured significant amounts of personal data.
Prosecutors in Rome are also investigating whether Google's StreetView service violated privacy laws, a judicial source told Reuters on Wednesday. [ID:nLDE69Q280]
But the FTC commended Google for building consumer privacy into its corporate structure, such as by appointing a director of privacy for engineering and product management, training key employees on privacy, and building a formal privacy review into the early phases of new initiatives.
"Because of these commitments, we are ending our inquiry into this matter at this time," David Vladek, director of the FTC's Bureau of Consumer Protection, wrote in the letter.
Regulators around the world have been increasingly vocal about protecting consumer privacy on the Internet at a time when companies from Google to Microsoft (MSFT.O) to Facebook are collecting vast amounts of information about consumers' online habits and using the data to help marketers target their ads.
Besides Britain and Italy, regulators in France, Germany, Spain and Canada have opened investigations into Google's Street Views cars, which crisscross the globe to take panoramic pictures of city streets.
While these probes have not had much of an impact on Google's shares, which edged lower on Wednesday along with the broader market, they are a distraction for a company and can hurt public perception of its business ethics.
Google acknowledged last Friday that its Street View cars had inadvertently collected more personal data than previously disclosed. But Google assured the FTC that it had not used and would not use the collected data in any product, the FTC said.
Colin Gillis of BGC Partners Inc said the FTC decision was nothing more than "one less hassle" for Google.
"I would say one less issue, but the issues seem to be growing," he said, noting the increased scrutiny that Google is receiving as it tries to make acquisitions to diversify its business beyond Internet search.
"I think the broader point is that Google with its position in our lives is going to continue to be a target and also under scrutiny (by regulators)," said Gillis.
INCREASED PRIVACY OVERSIGHTS
Connecticut Attorney General Richard Blumenthal, who leads a coalition of more than 30 states, said their investigation into Google's alleged invasion of privacy continues despite the FTC decision on Wednesday.
"Google's alarming admission last week -- confirming it collected entire emails and passwords -- only heightened our concerns about how and why this data was collected," he said in a statement.
Google disclosed in May that its Street View cars collected data from unsecured wireless networks used by residents in more than 30 countries.
Google apparently had planned to only collect a limited type of WiFi data relating to the WiFi network's name and router numbers. Google has said that its Street View cars no longer collect any type of wireless information.
On Wednesday, Google said it welcomed the FTC decision. "As we've said before and as we've assured the FTC, we did not want and have never used the payload data in any of our products or services," a Google spokesperson said in an emailed statement.
Joseph Turow, who teaches at the University of Pennsylvania's Annenberg School for Communication, said the data collection showed that someone else could scrape up the same information for malicious reasons.
"I think that this will be seen as another one of the steps along the way that expose the tenuousness of security," he said. "I never thought that this was anything more than Google screwing up but the implications are pretty heavy." (Reporting by Diane Bartz; Editing by Lisa Von Ahn, Gerald E. McCormick, Richard Chang, Phil Berlowitz)