Google Paid Its Way Out of CEO’s Prosecution?

Written on
Aug 29, 2011 
Gavin Dunaway  |

ADOTAS – Like a lot of media outlets, we were miffed by the $500 million fine the U.S. Justice Department levied against Google for letting Canadian pharmacies target drug ads to U.S. users through AdWords. We were nearly aghast when we learned that the settlement included both both the ad revenue and the pharmacies’ sales revenue — as Canned Banners cofounder and Adotas contributor Myles Younger noted, it sets a really scary precedent for other ad tech companies, especially those that manage self-serve platforms.

But a few documents emerged over the weekend that suggest Google agreed to the sizable fine (potentially the biggest the DOJ has ever levied) so cofounder and now-CEO Larry Page could avoid federal prosecution — and Google itself could avoid major public persecution.

According to a non-prosecution agreement, the government had warned Google back in 2003 about foreign pharmacies using AdWords to geotarget American users; apparently Google stemmed this practice for every country except Canada. Internal emails collected by the DOJ show that executives were aware that Canadian pharmacies were targeting U.S. users in their advertising, but the government alleged that Google did nothing to end the practice until the company learned of the DOJ investigation (or rather a DOJ sting operation).

Peter Neronha, the attorney general in charge of the DOJ’s probe, told The Wall Street Journal that Page himself knew about what was going on, and that enrolling two pharmacy verification companies was merely a distraction because the ad revenue was too sweet.

Unfortunately, we won’t get to hear the evidence behind those allegations or read the contents of those juicy emails because of the settlement. If you were wondering why Google would agree to such a lofty fine, consider that a public case would center around the company ignoring the law and consumer safety concerns (which is why the DOJ and other government agencies are so vehement in pharmaceutical investigations) in the pursuit of revenue.

Just imagine how loud the “Google IS evil!” cries would get then.

It would be one thing if this was a civil suit, but doesn’t this whole settlement stink of a payoff? That Google negotiated a fee to make sure Page didn’t face prosecution? I guess it’s common practice with the U.S. government — must be nice to be able to pay your way out of a criminal trial.

But even if Google is a special case because it could buy its way out of federal prosecution, Younger is right that the settlement sets a scary precedent for the rest of the industry; the DOJ could cite this case in prosecuting any advertising technology firm for both the ad revenue and the advertiser’s sales revenue.

As Younger commented on Friday: “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.”

Gavin Dunaway is Editor, U.S. at AdMonsters, a leading trade publication, event producer and service provider for the online advertising industry. Previously, he had been Senior Editor of Adotas, where he arrived after years of ping-ponging around various industry publications. This Washington, D.C. native and George Mason University graduate also enjoys playing electric guitar so loud that the walls shake.

Reader Comments.

Better to penalize Skynet $500 million and get them into compliance than to endure a lengthy trial that would not necessarily have been a slam dunk.

Posted by btn | 5:27 pm on August 29, 2011.

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