12:48 p.m. | Updated to include official announcement.
The government announced Wednesday that Google will pay $500 million to settle government charges that it has shown illegal ads for online Canadian pharmacies in the United States.
The fine, which the Justice Department said is one of the largest such penalties ever, covers revenue that Google earned from the illegal advertisers and revenue that the Canadian pharmacies received from United States customers.
As part of the settlement, Google acknowledged that it improperly aided Canadian pharmacies that operate illegally by failing to require a prescription or selling counterfeit drugs in advertising through its AdWords program.
Since 2010, after Google became aware of the investigation, it has required that all Canadian online pharmacy advertisers be certified by the Canadian International Pharmacy Association and they can only advertise to Canadian customers. United States pharmacy advertisers must be certified by the National Association of Boards of Pharmacy.
The investigation was first revealed in May, when Google said in a government filing that it set aside $500 million for the potential settlement of a Department of Justice investigation into its advertising practices. The move decreased its quarterly profit by 22 percent.
Google has said in the past that regulating these pharmacies on its site is a cat-and-mouse game, because when it introduces rules to prevent them from advertising, they find new ways to appear on Google.
Web sites are liable for ads on their sites from advertisers that break federal criminal law.
“We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago,” Google said in a statement Wednesday. “However, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place. Given the extensive coverage this settlement has already received, we won’t be commenting further.”
In a statement issued by the Justice Department, James M. Cole, a deputy attorney general, said: “The Department of Justice will continue to hold accountable companies who in their bid for profits violate federal law and put at risk the health and safety of American consumers. This settlement ensures that Google will reform its improper advertising practices with regard to these pharmacies.”
The investigation was led by officials from the United States attorney’s office for the District of Rhode Island and the Food and Drug Administration’s Office of Criminal Investigations.
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