Google rebuffed a request from German data protection officials to hand over data it mistakenly collected as part of Street View imagery.
Google had until midnight Wednesday to turn over a hard drive from one the vehicles collecting the data to Hamburg's Data Protection Agency.
"They told us yesterday that they refuse to give the hard drive because they are afraid they could breach German telecommunication law," said Johannes Caspar, who heads the Data Protection Agency, on Thursday.
Caspar said he spoke with Hamburg's prosecutor, who said they would not prosecute if Google turned over information to the agency. Google has been informed of that opinion, he said.
A Google spokeswoman in London said the company wants to comply with the request, but "granting access to payload data creates legal challenges in Germany which we need to review. We are continuing to discuss the appropriate legal and logistical process for making the data available. We hope, given more time, to be able to resolve this difficult issue."
Google could potentially face a €50,000 fine (£42,500) fine, for not turning over the hard drive, Caspar said. But the agency plans to have continuing discussions with Google over the next week.
Google has agreed to let experts from the agency examine one of the vehicles used to collect Street View images as well as the original software that was engineered to collect traffic from non-password protected Wi-Fi networks.
The data gathered included information such as SSID (Service Set Identifier) information and MAC (Media Access Control) addresses.
Google initially said it was not collecting the data. After Hamburg's DPA requested an audit, however, Google acknowledged it had in fact collected the data.The company said an engineer had written some code for an experimental Wi-Fi project that sampled "payload data" for publicly broadcast Wi-Fi networks. That code ended up in the software used in Google's Street View cars, which collect images of street scenes for Google's Maps application.
Since then, data protection officials throughout the world have undertaken investigations, including in Italy, France and Spain. Ireland and the U.K. said they would not take action if Google deleted the data.
Meanwhile, the Hamburg prosecutor's office started a criminal investigation last week into Street View. No charges have been filed yet, but the office has been in contact with Google, said spokesman Wilhelm Möllers on Thursday.
In the US, Galaxy Internet Services, an ISP for homes and businesses in Massachusetts, filed a class-action lawsuit against Google on Tuesday over the program.