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Google settles pharmacy ad probe for $500 mn

Last Updated: Wednesday, August 24, 2011 - 21:45

Providence (Rhode Island): Google Inc. has agreed to pay USD 500 million to settle a U.S. government investigation into the Internet search leader`s distribution
of online ads from Canadian pharmacies illegally selling prescription and non-prescription drugs to American consumers, a U.S. attorney said Wednesday.

The settlement means the Internet search leader will not face criminal prosecution for accusations that it improperly profited from ads promoting Canadian pharmacies that illegally imported drugs into the United States, US Attorney Peter F. Neronha said.

The USD 500 million represents the gross revenues Googlecollected in ad buys from the Canadian pharmacies, plus the earnings generated from the illegal sales of drugs to American consumers, federal investigators said.

Federal officials also say Google knew as early as 2003 that its ad system was allowing Canadian pharmacies to make illegal sales. These transactions included the sale of prescription drugs without prescriptions from a licensed
medical practitioner, federal prosecutors said.

Shipping prescription drugs into the U.S. from abroad violates drug and other laws, investigators said. Prescription drugs shipped into the U.S. from Canada are not subject to oversight by Canadian regulatory authorities and many sell
drugs from countries with inadequate pharmacy regulations, prosecutors said.

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 major money maker for Google and is expected to generate more than USD 30 billion in revenue this year.

Google acknowledged holes in its ad system in a federal lawsuit filed last fall 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, the illicit drug dealers would plug subtle misspellings of drug names frequently entered into Google`s search engine to generate ads alongside the results.

For instance, one illegal drug advertiser spelled the anabolic steroid Dianabol as "Diano bol" in Google`s automated system to produce an ad, according to the lawsuit in San Jose 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.

Bureau Report

First Published: Wednesday, August 24, 2011 - 21:45
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