THE BLOG
10/30/2014 03:18 pm ET Updated Dec 30, 2014

Google Adds $250 Million to Its Illicit Drug Marketing Tab

Google is a wealthy company with very deep pockets, and it's digging deep into them again right now to try to make an embarrassing situation go away. It's about to write another big check, this time for $250 million, to settle a class-action lawsuit brought by shareholders who claimed Google didn't take adequate steps to prevent these online pharmacies from using its ad networks. That is on top of the $500 million Google already agreed to pay the U.S. government to avert prosecution.

During the 2011 investigation, there were hints from prosecutors that high-level executives from Google had known about the illicit drug marketing, so perhaps that is why the company was quick to write a big check to avoid criminal charges. There is a lot we don't know about this troubling chapter in Google's history, including just how much money they made from working with these illicit overseas pharmacies.

When Google agreed to forfeit $500 million in 2011 - a figure based on both the company's ad revenues as well as the revenues from illegal pharmacies - to the government in a non-prosecution agreement, the company admitted they knew that rogue online pharmacies were illegally marketing medications through Google AdWords as early as 2003.

The troubling admissions made by Google to settle the criminal case formed the basis of a series of lawsuits, including several shareholder lawsuits that are slated to be preliminarily settled for a further $250 million. While $750 million seems like a lot of money, it's a drop in the bucket in comparison to the nearly $80 billion in revenue the company made during the timeframe in which it helped illegal pharmacies and other bad actors promote their goods and services on Google.

Even after the 2011 non-prosecution agreement, Google continued to generate revenues from those peddling the illegal sale of prescription drugs and steroids. Like drug dealers moving to another street corner because of heat from the police, these peddlers started marketing their drugs on YouTube, which is owned by Google.

And Google not only didn't stop it, it again generated revenues from rogue pharmaceutical companies, by running ads next to and during the YouTube videos. How much money did it make off the ads it ran next to and during YouTube videos? Again, Google isn't saying.

And that is just a little sad considering that when Google went public a decade ago, it adopted a "don't be evil" credo. In explaining it, its founders said, "we also display advertising, which we work hard to make relevant, and we label it clearly. This is similar to a well-run newspaper, where the advertisements are clear and the articles are not influenced by the advertisers' payments."

It's hard to reconcile Google's reputation for ingenuity with its statements that it can't come up with a way to prevent those drug dealers determined to use its platforms. Google has led to the development of Google Glass and a self-driving car. Yet the company claims it can't figure out how to stop videos on YouTube promoting illegal drugs, stolen credit cards, fake passports, and prostitution. The worst part is that Google not only tolerates these kinds of videos on YouTube, it generates revenue by showing ads next to them, and even shares a portion of these profits with those who post them.

Can you imagine what would happen if a reputable newspaper such as the New York Times or USA Today partnered with overseas pharmacies illegally offering narcotics and other prescription drugs? There would be a furor. But when Google does it, the company just writes a big check and moves on.

Google's users, advertisers and shareholders should demand more from the company. Advertisers, many of whom zealously protect their brands in other contexts, should tell Google they will pull their ads from YouTube until Google eliminates these videos marketing illegal drugs, medications available without a doctor's prescription, and steroids, from YouTube. Google has shown this is possible with their efforts to fight child pornography.

Google is a great company with brilliant minds. It has proven that it can do amazing things when it puts its mind to it. Hopefully, one of these days, it will make keeping dangerous and sometimes tainted drugs that come from disreputable overseas peddlers a priority as well.