Gmail Users That Sued Google Win $8.5 Million Settlement… But Won't Get Any Of The Money

How does an Internet search giant named Google tell users that it agreed to a settlement of $8.5 million over privacy breaches related to its Buzz social networking program. By Gmail, of course.

But Gmail users surprised to see an email from “Buzz” in their inbox on Tuesday evening got another surprise when they read the fine print: the agreement did not include cash payment to users.

Instead, the $8.5 million will go to an independent fund to support “organizations promoting privacy education and policy on the web.” Google said it will also make further, unspecified efforts to educate its users about Buzz privacy issues.

The settlement, formally announced by the company, comes at the conclusion of a class action lawsuit filed months ago by Gmail users who alleged that Buzz violated their privacy.

Buzz was launched by Google last February as a ‘social hub’ that let Gmail users track the status updates and other online information of their most frequently e-mailed contacts.

But the feature immediately raised the red flags of privacy advocates and users concerned that it was automatically added to Gmail accounts without making it clear what information would be shared with whom. Further fanning the flame was news the feature, in some cases, revealed the contact lists and data of users to other Gmail users.

“Google rarely contacts Gmail users via email, but we are making an exception to let you know that we’ve reached a settlement in a lawsuit regarding Google Buzz,” the company said in messages sent to its U.S. users.

Those reading the email with sharp eyes noticed why, exactly, the company took exception to their no-email rule.

“This mandatory announcement was sent to all Gmail users in the United States as part of a legal settlement and was authorized by the United States District Court for the Northern District of California.”

The company confirmed that everyone in the United States who uses Gmail was included in the settlement unless they decide to opt out before December 6, 2010. On January 31, 2011 the U.S. District Court for the Northern District of California in San Jose will hold a fairness hearing on the settlement.

The decision to settle closes the door on yet another privacy-related snafu for the company, most recently Buzz and its Street View mapping service.

“The settlement acknowledges that we quickly changed the service to address users’ concerns,” Google concluded to Gmail users.