Google's Page Knew of Illegal Pharmacy Ads: DOJ

Google CEO Larry Page knew the company was allowing Canadian pharmacies to advertise their prescription drugs in the U.S. on the AdWords platform, said the DOJ.

Google (NASDAQ:GOOG) CEO Larry Page for years knew about the ads his company served on behalf of Canadian online pharmacies illegally targeting U.S. consumers, according to a U.S. attorney who led the probe against the search giant.

The company Aug. 24 agreed to pay an unprecedented $500 million fine to the U.S. Justice Department to settle the allegations. Shipping prescription drugs to U.S. customers from outside the country is a violation of the Federal Food, Drug and Cosmetic Act and perhaps even the Controlled Substances Act.

Google admitted doing this from 2003 to 2009, after which it banned the practice. "It's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place," Google told eWEEK. The company declined to comment further on the matter.

The DOJ said in statement the fine equals both the sales Google made from the placement of those ads through its AdWords platform, as well as the sales the pharmacies earned from U.S. customers.

Now the lead investigator in this probe has come forward to say that it learned Page was aware of the ads.

"Larry Page knew what was going on," Peter Neronha, the Rhode Island U.S. Attorney who led the probe, told The Wall Street Journal. "We know it from the investigation. We simply know it from the documents we reviewed, witnesses that we interviewed, that Larry Page knew what was going on."

Neronha, who said he would not prosecute the company further, helped pore over 4 million-plus documents and discovered emails and other information that indicate Page knew of the illegal ads.

He concluded that it was not a matter of a few rogue customer service workers enabling the ads, but a corporate decision to allow them. This documentation will be sealed as a result of the settlement between Google and the DOJ.

Google declined to comment on whether Page and other top executives knew of the illicit ad sales, which Google sought to combat by filing a federal lawsuit to block individuals running illegitimate pharmacies from advertising on its search engine.

The accusation is something of a small powder keg for Google, which has worn its "Don't Be Evil" mantle proudly for several years. Google watchers, journalists and pundits suggest the credo is aimed at doing the right thing only for Google's consumers.

The company has been unabashedly cutthroat toward the likes of Apple, Microsoft and smaller rivals that play where Google wants to command business online. Now the definition of "evil" may well find itself stretched to include enabling businesses to use its search engine to profit by breaking U.S. laws.

The fact that Page knew about this practice, which leveraged the search ad platform responsible for some 97 percent of the company's sales, and looked the other way, suggests a brazen arrogance in the face of the U.S. government.

This finding is certainly something the Federal Trade Commission may pay close attention to as it scrutinizes the company for antitrust issues regarding its search ad business. In fact, the FTC may use it as an excuse to investigate the company more aggressively going forward.