A smartphone with a Google app icon is seen in front of the displayed Australian flag in this illustration, Jan 22, 2021. (DADO RUVIC / REUTERS)

Australia's competition regulator said on Friday its lawsuit against Alphabet Inc's Google that alleged consumers were misled about expanded use of personal data for targeted advertising had been dismissed by a court.

The Federal Court found that the notification which allowed users to accept policy changes was not misleading since Google "only implemented the steps with their (users') informed consent"

The proceedings, initiated by the Australian Competition & Consumer Commission in July 2020, alleged Google did not explicitly take consent from users about a change made in 2016 that combined personal information in Google accounts with activity on non-Google sites that use its technology to display advertisements.

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The Federal Court, however, found that the notification which allowed users to accept policy changes was not misleading since Google "only implemented the steps with their (users') informed consent", the regulator said.

"The court also noted that Google did not reduce account holders' rights under the privacy policy."

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Google Australia did not immediately respond to a Reuters request for comment.