Google 'close to $500m settlement' over illegal drug ads
Payment would be among largest penalties in US history
Google has set aside $500 million not for an antitrust settlement, but to settle a US criminal investigation into claims that it made hundreds of millions of dollars from ads purchased by illegal online pharmacies, according to a report citing people familiar with the matter.
Earlier this week, in an SEC filing, Google said it had set aside $500m for a potential settlement with the US Department of Justice involving the use of Google advertising by "certain advertisers", but the company not provide additional information. Google co-founder Sergey Brin was asked about the filing this week at Google's annual developer conference, but he declined to answer.
It was assumed that the filing with related to possible antitrust investigations into the company's practices, but according to The Wall Street Journal, Google is close to settling with the DoJ over allegations that it knowingly accepted ads from online pharmacies that were violating US law.
Google did not immediately respond to a request for comment.
A $500m payment would be among the largest penalties paid by a company to the US government, according to The Journal. In 2007, Google, Microsoft, and Yahoo! paid a combined $31.5m to settle allegations they profited from illegal gambling sites.
According to The Journal, the potential $500m settlement involves ads for pharmacies in Canada and other countries. In 2004, the paper points out, Google announced that it would continue accepting ads from Canadian pharmacies, sparking criticism from some US pharmacies and regulators. The current investigation was been carried out by the US Attorney's Office in Rhode Island and the Food and Drug Administration (FDA) as well as other agencies, The Journal said.
In February 2010, Google announced that it would only allow ads from US pharmacies approved by the National Association of Boards of Pharmacy and from Canadian online pharmacies approved the Canadian International Pharmacy Association.
The Journal report is just another indication that Google's ad system can be friendly to bad actors, and it raises more questions about how far Google goes to prevent such exploitation. Harvard professor Ben Edelman estimates, for example, that the company makes nearly $500m a year from "typosquatters". In a 2010 study, he estimated that at least 938,000 domains were typosquatting on the top 3,264 ".com" websites, waiting for web users to mistype or misspell a URL, and that 57 per cent of these "mispelled" domains included Google pay-per-click ads. Typosquatting can violate US trademark law. Google says it will remove typosquatting domains if it is made aware of them.
Ads from illegal online pharmacies are more serious issue. As The Journal points out, Google has taken action before against such sites. In 2003, for instance, the company said it had banned ads from US operations that offer Vicodin, Viagra, and other drugs without a prescription. ®
Following the money
Going after companies like Google is obviously easier than tracking down the people behind these fake "pharmacies", as shown by http://www.theregister.co.uk/2009/11/30/spam_fine/, but it doesn't do a lot to get them shut down. Locking up the spammers would be very satisfying but there are plenty more to take their place. I suppose the main reason these spammers exist is because there's a market for what they sell. Would there be so many dodgy offshore casinos if online gambling was legalised in the US, and would there be quite as much a demand for "Canadian" "pharmacies" if medicines were easier and cheaper to get hold of legally? Despite all the lobbying against free healthcare in the US I wonder how many people over there would welcome the chance to buy medicines on prescription from known and trusted sources for about $10 as we do in the UK under the NHS, and what the knock on effect would be on the scam pill pushers.
Damned if you do...
...it seems easy to say, well, they should have been paying attention and not allowed the ads. But if they'd erred on the side of preventing ads that might be placed by sleazebags, there'd be a hundred breathless stories about how evil Google is for preventing [ma-and-pa-shop here] from placing ads, and obviously it means they're favoring [big competing company that places more ads].
I don't have much time for companies that 'launder' ads that lead back to scumware after a few steps. A few years ago, I found a big chain of ads on Overture (Yahoo's service, IIRC) that lead straight back to some Russians who were doing the CoolWebSearch trojan. But calls to Yahoo and similarly complicit ad brokers - which didn't at the time include google, interestingly - were blown off; they just checked out the first level away, and since *that* level wasn't doing anything bad, they didn't care. And that level went to a webhost in Canada, and that one went to a host in Estonia, and that one would go to a bulletproof host in Russia that would actually stick the banner ads up and then serve the page to hijacked computers.
If you ask me, the guys who need to be hauled out and shot are the ones buying the top spot ad for things like malwarebytes, that sucker people into reflexively clicking a link to freesoftdownload.ru or whatever the hell, which undoubtedly serves precisely the things that malwarebytes is meant to detect...
God help a legit pharmacy located in Canada that tries to send its customers an email...
@no such thing as free healthcare
"when in fact they are paying more on average, through being taxed and paying a government bureaucracy to manage things, than if they paid upfront for the service"
How much do Americans pay on average for health care (I include "company cover" which is of course also a stealth tax)?
How dose this compare to the UK (e.g. NI minus the pensions part)?
I know of a late family friend from the USA who came to the UK for 3 weeks of holidays and *private* dental treatment as it much cheaper than just getting it done in the states.
Unfortunately he did not provides financial details, though is actions speak for themselves, but clearly you can to back your statement up?