08/25/2011 08:32 am ET | Updated Oct 25, 2011

"Say It Ain't So, Joe": Of Google and Some Serious Misbehaving

Well, there is something happening out there in search engine land, and it's not pretty... Google got caught making a series of major mistakes, continuously, between 2003 and 2009, and the search engine press has noticed it.

Of course, it's hard not to notice these mistakes, given their magnitude and the magnitude of the government's response. In Wednesday's Department of Justice Press Release it's clear that Google has admitted to some pretty serious offenses, in exchange for a non-prosecution agreement from the DoJ.

What Google has Admitted

(1) Google not only allowed the illegal importation of drugs into the United States from Canada, but aided and abetted it:

This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google's knowledge and assistance, into the United States, directly to U.S. consumers,... It is about holding Google responsible for its conduct by imposing a $500 million forfeiture, the kind of forfeiture that will not only get Google's attention, but the attention of all those who contribute to America's pill problem.

(2) The press release notes that this behavior is harmful to American consumers for a variety of reasons.

The shipment of prescription drugs from pharmacies outside the United States to customers in the United States typically violates the Federal Food, Drug and Cosmetic Act and in the case of controlled prescription drugs, the Controlled Substances Act.

The importation of prescription drugs to consumers in the United States is almost always unlawful because the FDA cannot ensure the safety and effectiveness of foreign prescription drugs that are not FDA-approved because the drugs may not meet FDA's labeling requirements; may not have been manufactured, stored and distributed under proper conditions; and may not have been dispensed in accordance with a valid prescription.

So no, this is not a victimless crime, in which Google merely helped consumers get drugs faster or cheaper than they would have gotten them in the US. Google helped consumers get drugs without prescriptions, and without medical supervision. Google helped consumers get drugs that may have been substandard, mislabeled, or even counterfeit.

(3) For years Google put American consumers at risk in pursuit of profits, while knowingly violating federal law. Companies that violate federal law and put consumers at risk will be held accountable. I almost wrote "will be prosecuted to the full extent of the law", which is what I expected to see. But, indeed, there is no prosecution here; that's what a non-prosecution agreement ensures.

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 while paying one of the largest financial forfeiture penalties in history.

(4) Of course, when the Federal investigation began Google stopped the illegal practices immediately, so it's hard to argue Google was either unaware of them or unable to intervene effectively when it chose to. Indeed, Google was not only aware of the practices, it helped Canadian companies optimize their illegal behavior.

Further, from 2003 through 2009, Google provided customer support to some of these Canadian online pharmacy advertisers to assist them in placing and optimizing their AdWords advertisements, and in improving the effectiveness of their websites.

(5) And Google really can't say much in its defense now. Paragraph 2 of the Non-Prosecution Agreement lists, in sub-paragraphs (a) through (q) the abuses that Google has agreed to, and when it was aware of them. The Press Release makes it impossible for Google to argue that it was unaware of the practices, and indeed claims that Google helped the Canadian firms optimize their websites. Indeed, paragraph 14 prohibits Google or any of "its attorneys, agents, officers, directors, or employees" from contradicting any element of paragraph 2.

I guess Google really did commit the offenses covered in 2 (a) through 2 (q). It's now not only difficult to argue that Google was unaware, it violates the terms of their Non-Prosecution Agreement for Google to do so.

(6) But no, it does not look like Google is going to spend much time or effort apologizing:

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.

I'm not sure how much hindsight this required. With foresight, perhaps, breaking the law might not have seemed like something they should have allowed in the first place.

(7) And yes, Google got off pretty easy. No one is going to be prosecuted, that of course it what a non-prosecution agreement ensures. And Google is therefore not paying any fines, damages, or trebled punitive damages. (At least not yet. Paragraph 16 of the non-prosecution agreement explicitly notes that this agreement is not binding on any prosecuting authority other than the [Federal] Government.) Google is merely forfeiting the profits from illegal activities. That's what a forfeiture is. No punishment, just give the money back. It's a lot of money, sure; it's one of the largest forfeitures in the history of the DoJ. But I imagine that every bank robber, every embezzler, and every white collar criminal of any type would love to have a similar opportunity to forfeit the gains from his or her activities in exchange for signing a non-prosecution agreement.

Is this really a surprise?

It's hard to remember that Eric Schmidt stepped down as Chief Executive of Google in January because "adult supervision no longer needed at Google." I'm beginning to like my own assessment from January 21, when I wrote that Larry Page would need to ...

Control the cowboys... Google's behavior was cute when it was a tiny company headed by a group of committed techies; it's now increasingly seen as rapacious and dangerous, defensive and monopolistic. Set some limits on corporate behavior, truly stop accepting evil and do so before regulators in the E.U. and the U.S. come down really hard.

I concluded with,

The boys are back in charge, this time with a much more powerful toy. Anything goes. Be afraid, be very afraid.

The first reaction of everyone, both fans and foes, was "Say it ain't so, Joe!" I was happy debating with Google executives about whether or not search represented an essential facility, or whether Google had or abused monopoly power in search. I was not expecting to find Google accused of drug smuggling.

"Trust me" works for only so long. Guys who make their own rules need to understand and live by the rules that govern the modes of behavior that they embrace.

But to live outside the law, you must be honest.

And, indeed, perhaps Google's façade of uninterrupted and unblemished public service, if not gone, is showing some real, serious cracks.

Is this really a betrayal?

Google's façade did not just happen, but has been carefully maintained. See the statement of Google's Philosophy, "Ten things we know to be true", and judge how well the behavior covered in the non-prosecution agreement measures up.

6. You can make money without doing evil.

We don't allow ads to be displayed on our results pages unless they are relevant where they are shown. And we firmly believe that ads can provide useful information if, and only if, they are relevant to what you wish to find-so it's possible that certain searches won't lead to any ads at all.

Note that nothing here requires that the ads be legal.

Some of my more skeptical friends have also noted that, while you "can make money without doing evil", apparently you can make additional money being evil as well.

1. Focus on the user and all else will follow.

What about facilitating the importation of dangerous, unsupervised, or counterfeit drugs? Is that really focusing on the user?

What next?

So now it appears reasonable to ask what else Google has been doing. Which other of Google's sacred principles are not-so-sacred after all? Which of the other ten things is up for grabs? Which of the other principles will we find have also been violated? Which other activities will we learn "in hindsight" Google executives "shouldn't have allowed"?

I may be most disturbed at the moment by the fourth of the ten things, not because there is anything wrong with openness on the web, but because I fear that this point is simply code for something else.

4. Democracy on the web works.

Is that just code for we don't need regulation, we don't need rules, and don't interfere with out user-focused innovation? Does this mean "we don't need no badges; I don't have to show you no stinkin' badges"? Does this mean that Google believes that it can do whatever it wants without regulation? Not any more.

Years ago, when I first tried to write about the possibility of a RICO violation for Google my editors wouldn't publish it. Maybe now the subject is no longer unmentionable.

Now more than ever I am interested in seeing the results of the FTC investigation.