Google has avoided the threat of criminal prosecution by agreeing to pay $500 million in fines for publishing adverts selling illegal drugs to US customers.
The fine is relative to the profits made by Google from Canadian pharmacies selling illegal prescription drugs to US customers. It covers both the ad profit made, and the revenue the pharmacies reaped on their dodgy pills.
An investigation by the US Justice Department found that the search giant had known since 2003 that many Canadian companies were selling medicine to Americans without a valid prescription.
The company will also be required to follow a number of “compliance and reporting measures” to ensure there is not a repeat offence.
“We banned the advertising of prescription drugs in the US by Canadian pharmacies some time ago,” Google said in a short statement.
“However, it’s obvious with hindsight that we should not have allowed these ads on Google in the first place.”
The Justice Department said: “While Canada has its own regulatory rules for prescription drugs, Canadian pharmacies that ship prescription drugs to US residents are not subject to Canadian regulatory authority, and many sell drugs obtained from countries other than Canada which lack adequate pharmacy regulations.”
The investigation began back in May and it was found that although Google knew about the questionable nature of the advertising, it continued to allow the ads and collect revenue from them.
In 2004, vice president for global online sales at Google, Sheryl Sandberg, testified before the Senate that the search engine company had the problem under control.
However, a source told the New York Times that the company “did not turn a blind eye to the pharmaceutical advertising, but rather played a game of Whac-A-Mole with the rogue pharmacies.”
They have now put in place rules that require Canadian pharmacy advertisers to be certified and have insisted that they can only advertise to Canadian customers.
The Justice Department said in its Wednesday statement: “Google acknowledges that it improperly assisted Canadian online pharmacy advertisers.”
Analysts said that online advertising is inherently difficult to monitor because online pharmacies tend to have high advertising budgets and deliver “frequent, rapid-fire” ads which make it difficult to track them.
It is also thought that the settlement will have little effect on smaller ad platforms as Google’s reputation and dominance makes the company an obvious target for regulators.