Internet search firm escapes prosecution over adverts from Canadian pharmacists promoting illegal prescription drugs in US
Google has avoided a criminal prosecution in the US after agreeing to pay $500m (�305m) to settle a government investigation into its display of advertisements from Canadian pharmacies which illegally sold prescription and non-prescription drugs to American consumers.
The settlement means the company will not face prosecution over accusations that it improperly profited from the ads. The $500m represents the gross revenues Google collected from the Canadian pharmacies plus the earnings generated by the illegal sales of drugs to American consumers, federal investigators said.
The agreement ends speculation that began in May when the company referred to a justice department investigation into its automated system for placing ads alongside search results and subtracted $500m from first-quarter earnings to cover a potential settlement.
That fuelled talk that the allowance might be against an antitrust investigation which the US federal trade commission has begun into its search policies. Instead the FTC investigation, like a similar European inquiry, appears to be continuing.
US officials said Google knew as early as 2003 that its advertising system was allowing Canadian pharmacies to ship prescription drugs into the country from abroad, which is illegal under US law. Prescription drugs shipped into the US from Canada are not regulated by the Canadian authorities.
The investigation laid bare how vulnerable the company's automated ad system, known as AdWords, is to the machinations of shady operators. The ad network is a big money maker for Google and is expected to generate more than $30bn this year.
Google acknowledged holes in its system in a federal case brought last autumn against dozens of "rogue" online pharmacies that were finding ways to place ads for drugs despite the company's efforts to prevent abuses. The individuals identified in the complaint were in New York, Tennessee and Ohio.
In one of the more common practices, pharmacies would plug subtle misspellings of drug names frequently entered into the search engine. For instance, one illegal advertiser spelled the anabolic steroid Dianabol as "Diano bol" in Google's automated system to produce an ad, according to the lawsuit at San Jos� federal court.
Google has obtained court orders banning some of the rogue pharmacies named in the lawsuit and is still seeking injunctions against the others.
The state of Rhode Island has aggressively investigated such activities recently. Last year, the Chinese company GeneScience Pharmaceutical and its chief executive pleaded guilty to selling human growth hormone and paid $7.5m.
The Google lawsuit came seven months after the company imposed new restrictions on the kinds of pharmaceutical ads it would accept in the US and Canada. The new rules were supposed to allow ads only from US pharmacies that had been accredited by a special programme.
Google's critics have complained that the company and other websites have not been vigilant about policing pharmaceutical ads because they are so lucrative. Drug and healthcare ads generated about $1bn in internet spending last year.
Source: http://www.guardian.co.uk/technology/2011/aug/24/google-settles-us-drug-advertising-case
