• by Wendy Davis  @wendyndavis, January 31, 2011

The Connecticut Attorney General has agreed that Google need not turn over "payload data" -- including WiFi users' passwords, emails and the sites they visited -- accidentally collected by its Street View cars.  

Instead, Connecticut's top law-enforcement official allowed Google to stipulate that its cars collected such data. George Jepsen, who is spearheading a 40-state investigation originally launched by predecessor Richard Blumenthal (now a U.S. senator), said agreement paves the way for a settlement of the privacy issues posed by Google's WiFi snafu.

Google admitted last year that its Street View cars collected URLs, passwords, emails and other data sent over unencrypted WiFi networks. Google apologized for the interception, and said it intended to destroy the data, but also says that it did not violate any U.S. laws by collecting data from unsecured networks.

News of the interceptions pitted digital-rights advocates against each other -- with some groups, including the Electronic Privacy Information Center, arguing that Google should reveal what it collected to government officials. Others, like the Electronic Frontier Foundation, maintained that disclosing the communications could further compromise users' privacy.

Google's revelation also triggered investigations in the U.S. and abroad, where many countries have broad privacy laws. In the U.S., in addition to the probe led by Connecticut, the Federal Trade Commission and Federal Communications Commission launched investigations. The FTC closed the matter without taking action, but the FCC probe remains ongoing.

Google's admission also sparked more than a dozen potential class-action lawsuits in the U.S., which were consolidated into one case now pending in federal court in San Jose.

The search giant recently filed court papers asking for that case to be dismissed. The company argues that federal wiretap law only prohibits companies from collecting material from password-protected networks, not unsecured ones. The statute itself says it's not unlawful to intercept communications that are "readily accessible to the general public."

Last week, consumers who are suing opposed that motion. They argued in court papers that even unsecured WiFi networks should not be considered accessible to the public. "Google would have the Court believe that what it did was no more invasive than 'free-riding' a neighbor's WiFi network to access the Internet without payment," the consumers argued. "Google intentionally went far beyond identifying home-based wireless networks or even surfing the Web over them."

The search giant continues to deal with fallout abroad. Late last year, the New Zealand privacy commissioner reported that Google broke that country's law by capturing WiFi transmissions. South Korea authorities likewise said that Google violated the country's law.