The New York Times has published a report announcing that Google will pay $500 million to settle U.S. government charges that it has been running illegal ads for online Canadian pharmacies in the U.S. It’s the first time an Internet search engine is being held responsible for the illegal distribution of drugs.

The fine, which the U.S. Justice Department said is one of the largest such penalties ever imposed, covers revenue that Google earned from the illegal advertisers and revenue that the Canadian pharmacies received from United States customers.

As part of the settlement, Google acknowledged that it improperly aided the Canadian pharmacies – which operate illegally by failing to require a prescription or selling counterfeit drugs – in advertising through its AdWords program. This ad network is a major moneymaker for Google, expected to generate more than $30 billion in revenue this year.

So perhaps this new $500 million penalty is not as painful as it seems at first blush?  Continue reading →