The regulator said this practice allowed the Alphabet Inc unit to link the names and other ways to identify consumers with their behaviour elsewhere on the internet.
The Australian Competition and Consumer Commission (ACCC) is claiming that Google failed to properly inform consumers, and did not gain their explicit consent, about its move in 2016 to start combining personal information in users' Google accounts, which also included browsing information on non-Google sites. The data was previously kept separate from Google accounts.
The Australian Competition and Consumer Commission's (ACCC) action in the Federal Court is the latest litigation Google has faced around the world over allegations of privacy breaches.
ACCC chair Rod Sims said: "We believe that many consumers, if given an informed choice, may have refused Google permission to combine and use such a wide array of their personal information for Google's own financial benefit".
Australia's consumer watchdog, the ACCC, is taking Google to court over allegations it didn't get explicit consent from Australian consumers to use their personal data in combination with their internet browsing habits in an expanded targeted advertising scheme.
However, Google said the change was optional and consumer consent was sought through prominent and easy-to-understand notifications. And it claimed that "confidential basis pending claims by Google".
Australia's consumer watchdog launched court action against Google on Monday alleging the technology giant misled account holders about its use of their personal data.
"We allege that Google did not obtain explicit consent from consumers to take this step". "It then used this information to serve up highly targeted advertisements without consumers' express informed consent", he said.
The Competition and Markets Authority have taken aim at the USA tech giants in a report that recommends the British government adopt a new regulatory approach to governing big digital platforms making money from online ads. We've collaborated with the ACCC's investigation into this issue.
"If a user did not consent, their experience of our products and services remained unchanged", a Google spokesman said.
" We have introduced some additional features for your account that give you more control over the data Google collects, how it is used, and at the same time allow Google to show you more relevant ads, " the notice said.
This "I agree" message was presented to millions of Australians with Google accounts, the ACCC said.
The competition watchdog's case against Google which it brought forward a year ago alleged the tech company engaged in "misleading conduct and made false or misleading representations" to users over its collection of location data.
The ACCC anticipates being able to fine Google "in the millions" for the activity, Sims explained to Reuters. As the change was "worth a lot of money to Google", the commission alleges that it was "achieved through misleading behavior".
However, a Google Australia spokeswoman said the company strongly disagreed with the ACCC's claims and meant to "defend our position" in court.
"We strongly disagree with their allegations and intend to defend our position", the spokesperson added.