Report: Google May Pay $500 Million To Settle Complaint Over Illegal Drug Ads

Earlier this week, Google filed a mysterious report with the Securities and Exchange Commission, saying it was setting aside $500 million related to a “potential resolution” of an advertising-related probe being conducted by the U.S. Department of Justice. Now, the mystery may be solved.

The Wall Street Journal is reporting that the investigation relates to possible criminal charges, alleging that Google knowingly took money from, and displayed ads for, advertisers that violated U.S. prescription drug laws.

The Wall Street Journal, like Search Engine Land, got “no comment”s from official sources, but cites information from “people familiar with the matter” in pegging prescription drug violations as the crux of the probe. The WSJ says the U.S. Attorney Office in Rhode Island and the Food and Drug Administration were among the agencies conducting the investigation.

Though the WSJ says the questionable ads were placed by online pharmacies in Canada and elsewhere that violated U.S. laws, it’s not clear whether they dispensed drugs without a prescription or whether they sold counterfeit pharmaceuticals.

Google last month announced new anti-counterfeiting measures. Last September, the company filed suit to prevent rogue pharmacies from advertising on AdWords, saying it’s been a problem for years.

“It’s been an ongoing, escalating cat-and-mouse game—as we and others build new safeguards and guidelines, rogue online pharmacies always try new tactics to get around those protections and illegally sell drugs on the web,” wrote Google in a blog post attributed to Michael Zwibelman, Google’s litigation counsel.

The investigation would likely center on the question of whether Google knew that the ads were being placed by advertisers who were violating U.S. law. In 2007, Google, Microsoft and Yahoo together agreed to pay $31.5 million for running illegal gambling ads, after a similar DOJ investigation. Google only paid $3 million in that case, with the balance picked up by Microsoft and Yahoo.