By Jonathan Stempel
(Reuters) - Google agreed to pay $350 million to settle a lawsuit by shareholders related to a security bug at its now-defunct Google+ social media website.
A preliminary settlement was filed late on Monday in San Francisco federal court after more than a year of mediation and requires approval by U.S. District Judge Trina Thompson.
It resolves claims that Google learned by March 2018 about a three-year software glitch that exposed Google+ users' personal data, yet concealed the problem for months while publicly stressing its commitment to data security.
Shareholders said Google feared disclosure would subject it to regulatory and public scrutiny similar to what Facebook (NASDAQ:META) received after London-based Cambridge Analytica harvested its users' data for the 2016 U.S. elections.
According to the complaint, shares of Google's parent Alphabet (NASDAQ:GOOGL) fell several times as news about the bug surfaced, wiping out tens of billions of dollars of market value.
The lawsuit led by Rhode Island Treasurer James Diossa, on behalf of a state pension fund that owned Alphabet stock, covers Alphabet shareholders from April 23, 2018 to April 30, 2019.
Google denied wrongdoing in agreeing to settle and found no evidence that data were misused.
A spokesperson, Jose Castaneda, said: "We regularly identify and fix software issues, disclose information about them, and take these issues seriously. This matter concerns a product that no longer exists and we are pleased to have it resolved."
The Mountain View, California-based company reached a related $7.5 million settlement with Google+ users in 2020.
In 2020, a different judge had dismissed the shareholder case, but the 9th U.S. Circuit Court of Appeals revived it in 2021.
"Most people thought no one would recover a penny in this case, and when the first judge granted Google a dismissal the 'I told you so's' were deafening," said Jason Forge, a partner at Robbins Geller Rudman & Dowd representing the shareholders. "That just made Rhode Island and us more determined."
Lawyers for the shareholders may seek up to $66.5 million from the settlement for fees, court papers show.
Monday's settlement was disclosed 5-1/2 weeks after Google settled a lawsuit claiming it secretly tracked the internet use of millions of people who thought they were browsing privately. Terms of that settlement have not yet been disclosed.
The case is In re Alphabet Inc Securities Litigation, U.S. District Court, Northern District of California, No. 18-06245.