Regulators Say Google Knew About Illegal Drug Ads

Federal investigators say Google co-founder Larry Page knew ads for unlicensed online pharmacies were illegal but allowed them anyway, suggesting the government may continue to carefully monitor Google’s advertisements.

Google late last week agreed on a $500 million settlement in a U.S. Justice Department criminal probe about Canadian pharmacies’ advertising through Google-owned AdSense.

A federal prosecutor today said government investigators sorted through more than four million documents and found numerous emails that they say show Page was aware of the ad sales but didn’t stop them. Officials won’t release the documents because Google settled the case and a trial was not held.

“We simply know it from the documents we reviewed, witnesses that we interviewed, that Larry Page knew what was going on,” said U.S. Attorney Peter Neronha, who led the investigation, to The Wall Street Journal.

The Canadian pharmacies, which advertised on AdSense for years, had been selling prescription drugs without a doctor’s order to customers in the U.S., which violates federal law. It is also against the law for websites to knowingly accept ads for companies or services that are illegal.

The Justice Department says Google knew it was potentially violating U.S. law since at least 2003, but didn’t take action until federal investigations began in 2009. Although Google told Congress it tried to stop illegal advertisements, Neronha said those efforts amounted to “window dressing.”

“Suffice it to say that this is not two or three rogue employees at the customer service level doing this on their own,” Neronha told the Wall Street Journal. “This was a corporate decision to engage in this conduct.”

Google over the weekend declined to comment on Page’s alleged knowledge about the ad sales.

“This issue is not related to current advertising practices,” a company spokesman said. “We have settled and we are moving on…it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place.”

Even though Google admitted wrongdoing in the case, the settlement didn’t single out Page or any other executives. Neronha said he doesn’t have plans to prosecute Page, but also said the Google CEO, or other executives, are not off limits where prosecutions are concerned.

Google has a lot more to lose if the government finds any more problems with its advertising sales. Google’s AdSense program dominates mobile advertising, with Millenial Media reporting Google accounts for nearly half of all mobile advertising, a number that will likely continue to grow as more people use smartphones and tablets.

But last week’s settlement may just be the beginning of Google’s legal woes over its advertising practices, as Google is still involved in another, wider federal probe concerning antitrust practices, initiated by the Justice Department after rivals complained Google allegedly skewed search results to favour its advertisers.

Because the search giant and the government haven’t settled that investigation, Google may face millions more in settlement costs if the Justice Department finds it guilty of antitrust violations.

While Google agreed to settle the government investigation over the drug advertisements, Neronha’s statements about Page’s knowledge of improprieties concerning the sales may indicate the government probe into Google may not end for some time.

This post originally appeared at Mobiledia.