The EU has demanded that Google changes its privacy policies, which it claimes do not comply with their rules, and the search giant has been warned that failure to comply would result in "a phase of litigation".
The complaint by the EU comes after Google consolidated 60 separate privacy policies for all of its services into one single agreement with its users.
By combining the 60 policies into one, Google is now able to gather data about every user of every single one of its online services, and this information could be used to help target adverts at these users based on their online actions.
The French data privacy regulator CNIL, which led the inquiry, said Google had "months" to make changes to its policies, otherwise CNIL warned that it would "enter a phase of litigation".
Google has been asked to give clearer information about what data is being collected from its users and for what purpose; the company has also been told by CNIL to give users more control over how their information gathered across Google's services is combined.
In a letter sent to Google's chief executive Larry Page on 15 October, the EU data protection commissioner said that the company "empowers itself to collect vast amounts of personal data about internet users," without demonstrating that its collection of data "was proportionate."
The company was told that "combining personal data on such a large scale creates high risks to the privacy of users. Therefore, Google should modify its practices when combining data across services for these purposes," Reuters reported.
Google has yet to comment.