Google pays $500 million to make illegal drug-ad charges go away

Search giant reaches settlement with DoJ over illegally accepting ads from Canadian online pharmacies

As far as corporate punishment goes, the $500 million Google is paying to settle with the U.S. Department of Justice over allegations that it illegally accepted ads for prescription drugs from Canadian pharmacies seems, well, punishing.

But is the $500 million check that Google must write the U.S. government really going to hurt a company that has generated almost $70 billion in revenue over the past 10 quarters?

Of course not. If Google hits $40 billion in revenue for 2011 -- it has $17.6 billion through two quarters -- the settlement amounts to 1.25% of this year's sales.

From the Justice Department press release announcing the settlement:

The forfeiture, one of the largest ever in the United States, represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google’s AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers.

So Google has to give back the money it made from the rogue pharmacies, plus the equivalent of whatever the drug-sellers made. You can't argue that the ad-revenue dollars Google has to forfeit are a punishment, any more than you can argue that forcing a bank robber to give back the money he stole at gunpoint is a punishment. So the real punishment for Google is to pay the equivalent of drug-company revenues from AdWords. Not sure what that is, but I suspect it's well under half of that $500 million.

This, for a program Google ran for six years, even as it knew it was illegal.

Google was aware as early as 2003, that generally, it was illegal for pharmacies to ship controlled and non-controlled prescription drugs into the United States from Canada.

Further, as U.S. Attorney Peter F. Neronha, said, "This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google’s knowledge and assistance, into the United States, directly to U.S. consumers."

Patently unsafe and unlawful. That's pretty far from "Don't be evil," wouldn't you say?

If this bloodless comment from Google published in the Wall Street Journal is any indication, the search giant isn't exactly filled with remorse: "[I]t's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."

So Google for six years was knowingly enabling the "patently unsafe and unlawful" importation of unregulated prescription drugs, possibly endangering millions of Americans, and all the company has to say is that in "hindsight" it was the wrong thing to do?

Doesn't sound like a lesson learned to me.

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