14 DAY TRIAL // More details have leaked out on the mysterious $500 million charge Google set aside in Q1 for an investigation of the US Department of Justice. According to several reports, the investigation is over ads for illegal, in the US, online pharmacies.
Pharmaceutical ads have been the cause of legal troubles for the company and other search engines in the past. It is even worse now, since Google could be found to have profited from the ads it carried for these companies.
Neither Google, the DOJ nor the Federal Drug Administration, which is also involved in the matter, would not comment beyond the fact that the investigation was ongoing.
From what has been gathered, the investigation is over how much Google knew about the ads it served and whether it knowingly profited from them.
In 2003, Google moved to ban some pharmaceutical ads on its network, from companies selling drugs without prescriptions. But it didn't move to block ads from legitimate companies outside the US, for example from Canada, that would sell to Americans.
Drugs can often be much cheaper in places around the US, like Canada and Mexico, which is why some Americans choose to buy them from abroad.
It was only in 2010 that Google said it will finally start blocking all pharmaceutical ads except from companies accredited by the National Association of Boards of Pharmacy or the Canadian International Pharmacy Association.
Later in the year, Google got on the offensive and sued a number of individuals and companies which had advertised drugs illegally via its ad network.
The investigation though focuses on issues that happened before this. There are no details on how far along the investigation is or whether Google should be worried.
But the company did set aside quite a large chunk of its Q1 net income, $500 million, for a potential settlement with the DOJ. Whether this means that it knows it is going to need it or it's just a precautionary measure is anyone's guess.