Australia's competition regulator has accused Alphabet's Google of misleading consumers to get permission for use of their personal data for targeted advertising.
The regulator said it was seeking a fine "in the millions" and aiming to establish a precedent.
The move comes as scrutiny grows worldwide over data privacy, with US and European lawmakers recently focusing on how tech companies treat user data.
The Australian Competition and Consumer Commission accused Google of not explicitly getting consent or properly informing consumers of a 2016 move to combine personal information in Google accounts with browsing activities on non-Google websites.
"This change ... was worth a lot of money to Google," said commission chairman Rod Sims. "We allege they've achieved it through misleading behaviour."
The change allowed Google to link the browsing behaviour of millions of consumers with their names and identities, providing it with extreme market power, the regulator added.
"We consider Google misled Australian consumers about what it planned to do with large amounts of their personal information, including internet activity on websites not connected to Google," Sims said.
However, Google said the change was optional and consumer consent was sought through prominent and easy-to-understand notifications.
"If a user did not consent, their experience of our products and services remained unchanged," a Google spokesman said in an email, adding that the company intends to defend its position.
Instead, the new policy read, "Depending on your account settings, your activity on other sites and apps may be associated with your personal information in order to improve Google services."
"This is an action we are taking that others have not," said Sims.
The regulator, through its action in Australia's Federal Court, wanted to establish the common law on what providers in various jurisdictions could do, and was potentially seeking "millions" in damages, he added, without specifying a figure.
"We will keep taking action, as will agencies overseas, and it will shape how these platforms behave, to make sure that the internet is a benefit to users, not a detriment," he added.