The DOJ's very tough enforcement agreement to not criminally prosecute Google for knowingly promoting illegal prescription drug trafficking for six years has many under-appreciated implications for Google's business and brand going forward.(See the DOJ-Google Agreement here and the DOJ's release here.)
- Simply this is a criminal non-prosecution agreement not resolution of a civil case because:
- Only the criminal statutes that were violated authorize a $500m forfeiture penalty; and
- The agreement explicitly empowers the Government to criminally prosecute Google at its sole discretion, if it believes Google has violated the agreement.
- In effect, this is a criminal plea bargain where Google agrees to a huge fine, cooperation with the government's ongoing investigations, and two years of probation in return for no criminal prosecution of Google.
- Reading between the lines, the Government's undercover "sting operation" must have uncovered exceptionally incriminating and embarrassing evidence that Google did not want exposed in a long public criminal trial.
I. Google's criminal plea bargain in a nutshell:
- Google admitted to knowingly engaging in illegal advertising of illicit prescription drug trafficking for over six years.
- Google accepted responsibility for its actions.
- Google disgorged all the relevant associated illegal revenues -- estimated to be $500m.
- Google represents it now has sufficient internal controls to prevent any re-occurrence of the illegal behavior.
- Google will continue to serve as an informant to the FDA "making referrals where the company determines that criminal investigation of a pharmacy advertiser is warranted."
- "The Government agrees to not prosecute the Company for any crimes relating to" the facts Google did not contest in the agreement, if for the next two years:
- Google complies and reports quarterly for two years;
- Does not mislead the DOJ;
- Does not engage in more criminal felony behavior; and
- Cooperates with law enforcement as an informant (para 8e).
- Google also agreed to not "make any public statements contradicting" its admissions of crimes it committed which were enumerated in para 2.
- Lastly, Google essentially has submitted to the mercy of the DOJ, in agreeing:
- The government has the sole discretion "to determine if there has been a deliberate violation of this agreement;" and
- That the agreement "is not reviewable by any court."
II. Implications of the Criminal Non-Prosecution Agreement:
The Google "Don't be evil" brand now has a criminal record.
- While Google officially does not have a formal or official criminal record, from a brand and public relations perspective it now does, given that Google in a public criminal plea bargain agreement with the U.S. Government, admitted to a series of felony crimes that endangered the health and safety of U.S. consumers and paid a $500m criminal fine in restitution for its admitted crimes, one of the largest forfeitures of its kind in history.
- For the average corporation this criminal plea bargain would not necessarily be a serious long term brand problem, but for a company like Google that has long and loudly touted its "don't be evil" exceptional ethics to promote unquestioned trust by over a billion users, this egregious violation of user trust could live on as a notorious example of Google not living up to its brand promise.
Opens Google to private class-action lawsuits.
- The criminal behavior that Google did not dispute in the agreement's "Relevant Statement of Facts" provides exceptional evidence fodder for class action lawsuits from the potentially thousands of consumers who unwittingly got, of could have been, harmed by Google's reckless disregard for their health and safety in illegally facilitating the trafficking of illicit prescription drugs over a period of at least six years.
Encourages prosecutions by state AGs and local law enforcement for other types of Google deceptive, predatory, and illegal advertising.
- If Google was knowingly promoting illegal prescription drug trafficking over the last several years and is willing to admit to it and pay restitution, complaints that Google has engaged in promoting other illegal activities could gain more credibility, attention, and urgency.
- If Google generated $500m in ill-gotten gains from just illegal prescription drug trafficking, State and local officials could estimate that Google has generated potentially hundreds of millions of illegal revenues promoting:
- Illegal downloading and file-sharing of pirated movies, TV shows, songs, books, etc.;
- Deceptive or fraudulent promotion of foreclosure and tax remediation scams; or
- Deceptive promotion of sites that charge for free products and services.
Encourages similar prosecutions by nations all over the world.
- If Google disregarded its own home country's pharmaceutical laws, other nations will naturally suspect and investigate if Google has illegally promoted illegal products and services in other countries as well.
- Just like Google's WiSpy privacy scandal of eavesdropping on tens of millions of people's home WiFi routers without permission precipitated privacy investigations by many countries around the world, this criminal plea bargain with the DOJ combined with the fact that Google is informing the U.S. government on potential crimes by foreign citizens, could embolden and trigger similar law enforcement investigations and actions around the world, with South Korea, Germany, Italy, Switzerland, and France being likely candidates.
Increases scrutiny of Google's mass IP infringement.
- If prosecution of illegal promotion of prescription drug trafficking is worthy of criminal prosecution, Google's longstanding, knowing mass IP infringement of intellectual property also could be worthy of prosecution in the U.S. or overseas.
- Remember Viacom sued Google-YouTube for a billion dollars for knowingly aiding and abetting similar illegal behavior.
- The world's authors and publishers are also in settlement talks with Google over Google's relentless 8 year effort to copy 15 million books without permission of the rights holders.
- Google's strong opposition to the pending Protect IP Act to stop mass IP infringement puts a big spotlight on Google's unique mass IP infringement vulnerability.
Adds fuel to the FTC antitrust investigation.
- Engaging in illegal behavior to generate additional revenues in a business that requires scale can be viewed as anti-competitive and a monopolization tactic.
- Knowingly engaging in illegal commerce that endangers consumers health and safety while representing to the public that Google always puts users' interests first, could be an FTC Section 5 deceptive practice.
- Google's criminal plea bargain proves that Google knows and acts on the reality that advertisers are their customers, not users as Google routinely publicly represents.
- If the FTC is looking for an incontrovertible example of how Google's serious undisclosed conflicts of interest can harm consumers, this Google criminal plea bargain is it.
Creates serious and legitimate trust issues for Google's efforts to win contracting business from Federal, State and Local agencies.
- Every government procurement official's fiduciary responsibility at every level is to do due diligence on a potential contractor's trustworthiness.
- The big takeaway for procurement officials from this affair is that Google was aware of the illegal behavior, and did not try to stop it for six years.
- This affair also raises questions about Google management's commitment and competence in effectively policing and managing Google's business to deliver on its representations.
Over time, this Google criminal plea bargain precedent arguably could have the potential to become a greater business and brand liability to Google than Google's much better known antitrust, property, and privacy liabilities, if other Governmental entities decide to pursue their own criminal cases against Google to gain restitution.
Moreover, admitting to knowingly engaging in and condoning ongoing felony criminal behavior that endangered the health and safety of tens of thousands of American consumers over a period of more than six years, makes a mockery of Google's famed "Don't be Evil" ethical credo and could undermine trust in the Google brand -- but only to the extent that consumers learn of it.