Federal Court Justice Thomas Thawley today agreed with the ACCC's assertion that many consumers were not aware of the second step.
That meant that, until a change in late 2018, the users of some Android phones had their location tracked even if they had ticked "No" or "Do not collect" in settings.
In a judgment published today, Justice Thawley therefore ruled that Google misled consumers about personal location data collected through Android mobile devices between January 2017 and December 2018, after a lawsuit brought by the ACCC.
The Australian watchdog describes its enforcement action as world-first.
Justice Thawley said in his judgement: "The ACCC submitted that the first representation was misleading because if the Web & App Activity setting was turned 'on', Google continued to collect and store such data. I accept this submission.
"Google's conduct would not have misled all reasonable users in the classes identified; but Google's conduct misled or was likely to mislead some reasonable users within the particular classes identified.
"The number or proportion of reasonable users who were misled, or were likely to have been misled, does not matter for the purposes of establishing contravention [of consumer law]."
A Google spokesperson said: "The court rejected many of the ACCC's broad claims. We disagree with the remaining findings and are currently reviewing our options, including a possible appeal. We provide robust controls for location data and are always looking to do more — for example we recently introduced auto delete options for Location History, making it even easier to control your data."
"This is an important victory for consumers, especially anyone concerned about their privacy online, as the court's decision sends a strong message to Google and others that big businesses must not mislead their customers," Sims said.
"Today's decision is an important step to make sure digital platforms are up front with consumers about what is happening with their data and what they can do to protect it."
However, the court dismissed the ACCC's allegations about certain statements Google made about the methods by which consumers could prevent Google from collecting and using their location data, and the purposes for which personal location data was being used by Google.
Today's judgement came against the backdrop of a number of Australian government actions against big tech, and Google itself.
They include a tussle over paying for news, where Google recently agreed to make payments to a number of publishers, and the ACCC's attempts to block Google's purchase of Fibbit, which are onging.
The Commerce Commission, which has been keeping a "watching brief" on the location history case across the Tasman, had no immediate comment.
