Google's Investigation has Cost $500 Million So Far - The UpStream

Google's Investigation has Cost $500 Million So Far

posted Sunday Aug 28, 2011 by Scott Ertz

Google's Investigation has Cost $500 Million So Far

We all knew it was only a matter of time before the Department of Justice's Google investigation started turning up some skeletons, but I don't think anyone thought Google would start settling the cases this quickly. The first case to come out of the investigations seems to be about advertising.

It would appear that Google took money from Canadian pharmaceutical companies to advertise their products to US residents. Now, while it is not unusual for Canadian companies to market to US citizens, it is unusual for a US-based advertiser to do so for pharmaceuticals. Why? It is illegal for a person to import non-FDA managed drugs, which is exactly the process these companies were trying to avoid.

How exactly did Google get involved and how much has it cost them? Hit the break to find out.

Google, through its AdWords program, accepted these companies as advertisers and published these ads all over the Internet. Any site who uses AdSense for advertising could potentially have shown these ads from Google. Google, of course, knew that this was against the law, but that didn't stop them from taking the money and running. They were unable to run too far, however. The government had warned Google as far back as 2003 that Canadian pharmacies were advertising to Google customers in the US and, while they did block other countries from doing it, never stopped the practice for Canadian companies.

As part of the agreement with the federal government, Google has forfeited $500 million, one of the largest sums ever in the US. That number is the gross revenue earned by Google for the advertising, plus the gross revenue earned by the pharmacies that did the advertising. Deputy Attorney General James M. Cole said,

The Department of Justice will continue to hold accountable companies who in their bid for profits violate federal law and put at risk the health and safety of American consumers. This settlement ensures that Google will reform its improper advertising practices with regard to these pharmacies while paying one of the largest financial forfeiture penalties in history.

The real question is, will this stop Google from doing things like this in the future? We know they have never been too thrilled with intellectual property, patents or privacy, so my guess is that things like this will continue to happen and they will pay the fines when they are caught. What are your thoughts on the matter? Let us know in the comments section!

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