Australia's consumer watchdog has taken Google to court claiming the tech giant misled consumers about the personal location data it was collecting.

The Australian Competition & Consumer Commission (ACCC) today alleged in the Federal Court that Google LLC and Google Australia Pty Ltd lied to consumers about data the tech giant collected when account settings were disabled.

The ACCC claims that from at least January 2017, Google breached Australian Consumer Law by continuing to collect personal location data after users disabled it manually in the settings menu.

Australia's consumer watchdog is accusing Google of failing to properly inform users when it was collecting location data. (AP/AAP)

It's believed the allegations only relate to Android mobile phones and tablets.

ACCC Chairman Rod Sims said Google muddled the waters of user's privacy by not having a single setting that turned off personal location data.

"We are taking court action against Google because we allege that as a result of these on-screen representations, Google has collected, kept and used highly sensitive and valuable personal information about consumers' location without them making an informed choice," Mr Sims said.

HOW IT WORKS

Let's imagine User A toggles their "Location History" to off in their settings menu to protect their privacy.

User A then uses Google Maps on their Android phone to search for a location – let's say from their office in Sydney's CBD to Town Hall station – to receive walking directions.

The ACCC alleges that even though "Location History" was turned off by User A, Google continued to collect and save personal location data via the maps application.

The two settings that would need to be toggled off to stop location data collection. (ACCC)

A TALE OF TWO SETTINGS

The ACCC court proceedings focus on two key settings on Android devices: "Location History" and "Web & App Activity".

When users turned their "Location History" off, Google did not automatically stop collecting GPS data about a user's location.

The consumer watchdog is arguing Google did not do enough to inform consumers they would also have to turn "Web & App Activity" off to protect the privacy of their location.

A deeper explanation of Web & App Activity. (ACCC)

"Our case is that consumers would have understood as a result of this conduct that by switching off their 'Location History' setting, Google would stop collecting their location data, plain and simple," Mr Sims said.

"We allege that Google misled consumers by staying silent about the fact that another setting also had to be switched off."

"Many consumers make a conscious decision to turn off settings to stop the collection of their location data, but we allege that Google's conduct may have prevented consumers from making that choice."

The ACCC also alleges that from around mid-2018 until late 2018, Google represented to consumers that the only way they could prevent Google from collecting, keeping and using their location data was to stop using certain Google services, including Google Search and Google Maps.

However, this could be achieved by switching off both "Location History" and "Web & App Activity".

It's the first time in the world such action has been taken against the tech giant. (AP/AAP)

ON-SCREEN STATEMENTS

The ACCC is also alleging in court that Google did not properly explain how a user's location data would be used in on-screen warning boxes that popped up when accessing the settings.

From early 2017, when a user accessed the "Location History" setting, Google informed the user via pop-up box that location data would only be collected and used for the consumer's use of Google services.

In reality, that data may have been used for purposes outside the strict use of Google services.

"We consider that because of Google's failure to disclose this use of data, consumers were and still are deprived of the opportunity to make an informed choice about whether to share their personal location data with Google," Mr Sims said.

"Transparency and inadequate disclosure issues involving digital platforms and consumer data were a major focus of our Digital Platforms Inquiry, and remain one of the ACCC's top priorities."

GOOGLE RESPONDS

A Google spokesperson told 9News.com.au the company was engaging with the consumer watchdog and intended to defend its conduct.

"We are currently reviewing the details of these allegations," the spokesperson said.

"We continue to engage with the ACCC and intend to defend this matter."

The ACCC is seeking penalties, declarations and a court-issued order requiring the publication of a corrective notice by Google.