US Authorities Move to Place Google Under Federal Supervision.

US Authorities Move to Place Google Under Federal Supervision.
The Consumer Financial Protection Bureau (CFPB) is moving to place Google under formal federal supervision, a bold step that could subject the tech giant to the same rigorous oversight applied to major financial institutions. Google has strongly resisted the idea, setting the stage for a potential legal showdown with significant implications for both the company and the CFPB’s regulatory powers in the digital age.

The CFPB’s push to bring Google under its direct supervision would involve regular inspections and monitoring of the company’s financial products and services, similar to the oversight banks and credit unions have long been subject to. According to two sources familiar with the ongoing discussions, Google has fiercely opposed this proposal during months of private talks, which have remained highly confidential. These deliberations could ultimately result in a major legal conflict that would test the scope of the CFPB’s authority over tech companies.

While the exact nature of the CFPB’s concerns regarding Google’s financial products remains unclear, the agency’s order to supervise the company is not yet final. Additionally, the political future of the CFPB and its current director, Rohit Chopra, may be in flux, particularly if Donald Trump wins the presidency again and shifts the agency’s direction.

A spokesperson for Google declined to comment, and the CFPB also refrained from providing details.

The CFPB, established after the 2008 financial crisis, has broad powers to protect consumers from unfair or deceptive financial practices. One of those powers includes the ability to place companies under formal supervision, giving regulators direct access to internal records and requiring firms to address any problems identified.

Traditionally, such oversight has been reserved for financial institutions, including large banks. But Chopra has raised concerns that tech companies, which offer similar financial products, are not subject to the same scrutiny. Google, for example, provides digital financial services like Google Wallet, which stores credit cards and allows users to make payments through their phones. The company has also faced hundreds of customer complaints regarding unauthorized charges on its platforms, prompting investigations by the CFPB.

To place Google under supervision, the CFPB must demonstrate that the company’s practices pose a risk to consumers. At the same time, the bureau is working on broader regulations that could expand its oversight to other tech giants, including Amazon, Apple, and PayPal-owned Venmo. These companies have pushed back against the CFPB’s proposals, arguing that such oversight is unnecessary and could harm small businesses. Silicon Valley has expressed particular concern that the CFPB’s regulatory powers could extend to broader aspects of their operations, not just their financial services.

The Computers & Communications Industry Association, a lobby group representing tech firms like Amazon, Apple, and Google, argued in a January letter to the CFPB that digital payment services differ significantly from traditional banking, and therefore should not be subject to the same supervisory framework.

The CFPB’s scrutiny of Google is part of a broader effort to examine the growing influence of the tech industry, particularly as these companies gather vast amounts of consumer data and expand their financial services offerings. Chopra has warned that this concentration of power allows tech companies to dominate markets and stifle competition—a charge many in the industry deny.

In 2021, the CFPB launched a formal inquiry into tech firms’ financial products, issuing information requests to major players in the industry. Since then, the agency has shown increasing willingness to invoke its supervisory powers. In 2022, Chopra announced that the CFPB would hold nonbanks to the same standards as traditional financial institutions, and earlier this year, the agency moved to supervise World Acceptance, a payday lender.

In recent months, the CFPB has expanded its oversight efforts, including placing the fintech company Affirm, which offers “buy now, pay later” services, under supervision. Affirm did not contest the order and later expressed support for the CFPB’s oversight. The bureau has also ramped up enforcement actions against major tech companies, such as imposing $90 million in fines on Apple and Goldman Sachs over their joint credit card, accusing them of misleading consumers.

In addition to investigating Google, the CFPB is reportedly probing Meta (the parent company of Facebook and Instagram) over its handling of financial data and advertisements. It has also investigated Block (the parent company of Cash App) regarding customer complaint handling.

As the CFPB intensifies its scrutiny of the tech sector, Google’s resistance to federal oversight may trigger a pivotal legal battle that could redefine the regulatory landscape for tech companies offering financial products.