Wednesday, August 31, 2011

AdWords under fire - quantify the liability

Google is reported to have forfeited a $500 million fine for assisting Canadian online pharmacies sell pharma products in the USA which are not licensed in the USA. This violates FDA regulations and is illegal in the USA.

The assistance came in the form of the Google adwords product and the customer support provided and optimisation techniques made available.

Some excerpts of the language used;

"...........this settlement ensures that Google will reform its improper advertising practices...........by compelling Google to change its behaviour.........it is about holding Google responsible for its conduct"

This decision is important as it suggests that Google are required to be aware of where they are placing advertising and will be held accountable if they are supporting illegal activity. Given the massive amount of copyright and trademark infringement that occurs online this presents an interesting problem.

Over the past 4 quarters (Q3 2010 - Q2 2011) Google generated $32.2 billion in ad revenue - approximately 97% of total revenues. How much of that revenue was generated supporting unlicensed material ?

A quick click on this LINK provides a reasonable perspective on the likely answer.