Google to Settle with U.S. Government for $500 Million

http://techcrunch.com/2011/08/24/google-to-settle-with-u-s-government-for-500-million/

by Garbage • 15 years ago

76 45 15 years ago

techcrunch.com

chubot• 15 years ago

These companies didn't advertise with Yahoo and Bing? I find it hard to believe.

RealGeek• 15 years ago

They do, but Bing and Yahoo does not provide enough volume.

I know of a few companies that sold $100 million worth of crap through Google adwords every month. There are at least a few hundred such companies.

Do the math to figure out how much Google made out of this :)

tptacek8• 15 years ago

How is that relevant? The government is not obligated to make a case against all offenders simultaneously. It has severely restricted resources for bringing major cases, and will bring them in the order that makes the most sense to the DoJ.

alextp3• 15 years ago

It's very relevant, as selective enforcement of laws is the bread-and-butter of corrupt and dictatorial governments everywhere. As the former de facto dictator (known anecdotally as "colonel" even though he was a civillian) of the place where I was born (Salvador, Bahia, Brazil) used to say: "to my friends, everything. To my enemies, the law"

patio112• 15 years ago

$1 million for advertising unlicensed pharmacies, $499 million for treating the government like a paying customer when it complained.

I'm joking, but only a wee bit.

patio112• 15 years ago

OK, on reflection this is excessively snarky.

The background for my comment: I've been peripherally involved with SEO for a couple of years now, and although I cherish my white-as-the-driven-snow reputation I know some folks socially who, well, don't. It's an open secret that a huge amount of the internet advertising market is a hive of scum and villainy. We often refer to it as PPC, which in this context means "porn, pills, casino", although there are other industries which have varying levels of sketchiness associated with them -- Make Money Online, government grant scams, ringtones and other rebilling fraud, etc etc etc.

Google has, since the inception of AdWords, made billions of dollars off of these. No joke.

Now, the government is often slow on the uptake, but they're not unaware of this. So here's a conversation which has virtually certainly taken place before:

Government: I see you're advertising X.

Google: We are?

Government: See here.

Google: Oh we are.

Government: You can't advertise X.

Google: We'll get right on that.

12 months pass

Government: You're still advertising X. Did you "get on it?"

Google: Oh yeah, we put some new heuristics in place.

Government: What does a heuristic mean?

Google: The computers guess whether that text means X and if it does, we don't advertise it.

Government: The heuristics seem to be missing quite a bit of X.

Google: Yeah, that happens.

Government: What do you mean "that happens"?

Google: No heuristic is 100% perfect.

Government: OK then, you need to have a human review these to make sure they aren't X or Y or Z.

Google: We don't do that.

Government: ... excuse me?

Google: We prefer scalable methods to manage our advertising programs. After all, there are only about ten thousand of us and we only make tens of billions of dollars with 35% margins.

Government: ... what?

Google: So you see, we won't manually review ads.

Government: This account, how much money has it spent on your ads while not being manually reviewed?

Google: SQL query About a hundred thousand dollars.

Government: Your compliance is not optional. Do you know who we are?

Google: Do you know who we are?

Government: You might think that was a cunning retort but, well, not really.

Edit for P.S.

Speaking of which, take a look at Aaron Wall's screenshot of an AdSense interface which allows you to opt out of having various seedy industries on your website.

http://www.seobook.com/how-make-easy-money-google

tptacek8• 15 years ago

That screenshot is upsetting.

throwaway45873• 15 years ago

Except Google employees do manually review ads. Ads that might break the guidelines, such as pharmacy ads, are flagged by the system when they are submitted. Flagged ads are then reviewed manually to see if they comply with policy.

ntoshev• 15 years ago

Humans are often worse than algorithms. But human mistakes (e.g. in medical practice) are socially acceptable, machine mistakes are not.

bane• 15 years ago

The government probably had to communicate with Google via an impersonal form that resulted in a form response that didn't address the problem in any way and required filling out the form every single day for 2 weeks until giving up in frustration, then ultimately getting an email from an engineer 7 weeks later letting you know the problem has been solved.

robfig2• 15 years ago

It's sort of disappointing to see the company that has by far the highest standards for ads be the one targeted. There are still so many terrible and scammy ads and ad networks out there, that making an example of Google just because they're the biggest seems too bad.

Also, wow, that's a lot of money. Does anyone know where money generated by lawsuits and fines goes?

jpadkins• 15 years ago

money is fungible. It goes to the federal government.

blub• 15 years ago

The "highest standard" in an unsavory industry doesn't mean much.

tptacek8• 15 years ago

Look at the Aaron Wall post Patrick linked to upthread.

robfig2• 15 years ago

Ah, didn't realize it was that bad. Thanks

psychotik2• 15 years ago

When a company settles with a government (US/EU/etc) where does the money go? Is it just up to the government to spend it, or is it distributed to the plaintiffs or something else entirely?

tptacek8• 15 years ago

When DoJ collects fines or asset forfeitures, it remits the proceeds to the Treasury.

psychotik2• 15 years ago

Wow, that's kinda crazy. It essentially means that companies can hurt competitors by violating a law, causing competitors to go out of business even, and then pay the government to 'repent' (and also agree to some scrutiny for that particular type of violation). But their objective of wiping out competition has been achieved.

Hisoka• 15 years ago

They got off too easy. It's easily billions they earned through this methods. Facebook is the same story. Many of their ad dollars are from scams, and shady schemes, not legitimate businesses. I mean... spending advertising dollars to advertise something pure on a social network where people go to talk with friends and ignore ads..... did you really think it would have a good ROI? it's rare. People often have to resort to making things as shady as possible to increase the ROI and make their advertising dollars worth it.

I can't put what I want to stay in clear words, but you need to be shady in order to make ludicrous money. Examples: Wall Street, casinos, etc. If you want to pure good, you're gonna have to give up some profit to do so.

clobber• 15 years ago

I know where you're going with this and agree with what you're saying.

I'm just waiting for Google or Facebook employees to chime in on this discussion. They love to talk about the great things they're working on, such as building "better" advertising, but never talk about the content of these ads.

Having run targeted PPC campaigns on Facebook before, I can report back that the ROAS/ROI is typically not very good at all.

DevX101• 15 years ago

Can someone explain exactly where this money will go?

Will it go to states, the federal budget, some specific department in the government? Is there a particular person who determines how this $500 million gets spent?

I've seen companies get fined before but its never explained what happens to the money post-fine.

tptacek8• 15 years ago

The Treasury, as if they were tax funds.

aklein• 15 years ago

The gov't statement makes it sounds like the "rogue illegal online pharmacies" were mostly just Canadian pharmacies? It's ridiculous how the US gov't treats Canadian-approved pharmaceuticals in general; it's oligopoly protection for US big pharma.

T-hawk• 15 years ago

The argument for the oligopoly protection goes that, without that protection, the pharma companies would not have invented the drugs in the first place because their ROI would be insufficient without the government-protected price premium. IOW, the Canadian pharmacies can offer so cheaply because they copy from the original inventors rather than doing the expensive research themselves. To what extent the pharma inventors truly need the protection versus to what extent pharmaceutical policing is cartel profit-taking is an open question, but it's worth keeping both points of view in mind.

blackguardx• 15 years ago

Actually that is incorrect. Canadian pharmacies don't copy the drugs. There are international drug patents in place.

Drug companies charge people in the US the most because the US allows it. In other countries, they charge a lot less because their governments demand it. Those governments are usually the customers in many countries with socialized medicine. When you buy in very large quantities of anything, you can always negotiate on price.

Unfortunately there is a law in the US preventing our socialized medical services (medicare, VA) from negotiating with pharmaceutical companies.

chalst• 15 years ago

The DOJ PR does not argue that the harm is undermining research, it cites putting US consumers at risk.

VladRussian• 15 years ago

>without that protection, the pharma companies would not have invented the drugs in the first place because their ROI would be insufficient without the government-protected price premium.

interesting, sounds like the invention and innovation would stop in that particular area of our technological civilization if the protection is turned off. Are we sure that the protection really stimulate the invention? I mean, in all other areas the government protection usually inhibits innovation - for example telecom started to boom as soon as demonopolization happened.

joelhaus2• 15 years ago

Why do U.S. laws protect the pharmaceutical industry at the expense of citizens? -- Isn't this the much more interesting question? Does it actually surprise anyone that, in areas where there are big market opportunities, you will find more scams on average.

Other than a supposed incentive for domestic pharma to innovate, is there another reason anyone can point to for classifying Canadian pharmacies as illegal? Personally, I can imagine a scenario where investment in drug research would actually increase if the industry wasn't afforded so much protection by federal law.

tptacek8• 15 years ago

Wall's screenshot suggests that for every dollar ad networks earn on pharmaceutical ads, they earn many more dollars on predatory "get rich quick" ads.

joelhaus2• 15 years ago

If you mean this screenshot: http://www.seobook.com/images/google-get-rich-quick.png, I don't see anything predatory about it--there is demand for these product categories and in a healthy economy, enterprising individuals should be rushing to supply them. For me, the SEOBook article falls flat and comes across as someone hand waving about people behaving irrationally.

True story, as a teenager, I bought Carlton Sheets no down payment real estate program. While Carlton didn't deliver any magic beans, I actually took a lot away from the experience. While there are no doubt hucksters out there, I think that most "get rich quick" offers do have some educational value... and if Google is doing their job, the products with the most value will get into more people's hands.

IvarTJ• 15 years ago

After having spent a lot of time researching autism related topics on the web, I have become very sceptical of anything that is marketed through Google Ads.

For several years, if not still, the anti-vaccine group Generation Rescue have had Google Ads proclaiming that “autism is treatable.” Jenny McCarthy, a TV entertainer who has been involved with Generetion Rescue, reportedly heard of the movement through Google Ads.

Google to Settle with U.S. Government for $500 Million

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