You may be aware Google agreed to pay $500M to the federal government because the company allowed its AdWords system to illegally promote Canadian pharmacies which shipped drugs to the US. In a non-prosecution agreement, Google admitted as much and moreover that it was aware this was an illegal practice since 2003.
- The agreement further explains the dangers this poses to consumers.
- The FDA cannot ensure the safety and effectiveness of these drugs
- Moreover they cannot determine if the drugs had been:
- Manufactured properly
- Stored properly
- Labeled properly
- Distributed under the proper conditions
- Or dispensed with a valid prescription
In addition, although Canada has a regulatory authority when it comes to prescription medication, it doesn’t apply in the case where drugs are shipped out of the country and as a result the drugs could have been sourced from countries other than Canada which did not have adequate pharmacy regulations according to the agreement.
Google and the government further agreed that the amount of revenue generated from these Canadian pharmacies during the period of 2003 to the present was about $500 million – the amount of the settlement.
Google has also promised to set up a comprehensive compliance and ethics program and set up systems which will detect and prevent further violations of the law.
We all know that Google’s informal motto is “Don’t be evil.” Moreover because of this tagline and the fact the company gives away so many free services, Google has positioned itself brilliantly as an indispensible part of virtually every web or mobile user’s life.
But if the company was aware that illegal activity contributed to its revenue and earnings which assisted not only in boosting the share price during the IPO and much of the last decade; the question is, does the $500 million dollar settlement go far enough? In other words, since 2003, the company has done something it knows broke the law and endangered the lives of its customers (searchers) and when caught, the company just loses the money it made.
During the same time the company was able to use the proceeds of these illicit activities to enter the e-mail, mobile and video spaces via the YouTube acquisition – and subsequently further entrench itself as a tech leader.
To me it seems like a light sentence but compared to some of the wrist slapping the Wall Street Banks get when they break the law, perhaps this agreement is a harsh one after all.
The question it raises to me is – if the penalty for getting caught is no greater than the revenue generated from the illegal activity, why would other companies, watching this situation be dissuaded from doing the same thing?
Google, for its part has a lot to lose as it occupies a coveted “golden child” spot in tech-land. But if this news and/or similar challenges in the future cause it to get more negative press, it is possible the company will be viewed like any other organization or corporation.
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