ADOTAS – We told you a few months ago that Google had set aside $500 million for an impending settlement with the U.S. Justice Department concerning Canadian pharmacies illegally advertising on its network. Well, the government came to collect possibly the largest fine it has ever levied yesterday, and some scary details of the settlement emerged.
According to The Wall Street Journal, “The $500 million sum represented both the illicit revenue earned by Google from the ads and the money earned by the Canadian pharmacies from their sales to U.S. consumers.”
Whoa — Google was charged for both ad revenue and the sales revenue? Not only does that seem a bit much, it seems even crazier that Google has settled the whole thing real hush-hush, without much of a (public) fight.
Canned Banners cofounder Myles Younger, who wrote a great analysis for Adotas when the news first broke that Google was storing away $500 million for a big fine, commented that the deal strikes a scary precedent for the entire digital ad industry.
“If the DOJ or anyone else finds your company liable for allowing illicit advertisers on your network, you’re potentially on the hook for your customers’ sales revenue in addition to your own ad revenue,” he said. “So I guess this ups the ante; not only do you need to watch out who you allow to advertise, but also what it is that they’re selling. Better hope it’s not counterfeit Ferraris.”
As for self-serve platforms, which include Canned Banners, Younger replied,”The more automated your platform is, the faster your total liability can scale — especially in the ecommerce vertical where the whole value chain is built on maximum-ROI, performance-based throughput.”
Yikes. Startups can’t just spare $500 million like Big G.