BULLETIN: Google Says Justice Department Is Investigating Its Advertising Program; Search Giant Sets Aside $500 Million, Notes ‘Potential Resolution’
DISCLOSURE: Until Jan. 9 of this year, the PP Blog displayed Google ads. See this post.
BULLETIN: Google disclosed in a regulatory filing yesterday that its advertising program was under investigation by the U.S. Department of Justice. The company announced that it has taken a charge of $500 million “in connection with a potential resolution.”
The Mountain View, Calif.-based firm provided few details of the probe, and did not say whether the investigation was targeting AdWords, AdSense or another facet of its advertising platform. The charge reduced Google’s first-quarter net income to about $1.8 billion.
AdWords is an auction-based system that enables advertisers to place ads on the Google network; AdSense is a program that distributes the ads. AdSense publishers earn fees when website visitors click on the ads.
This ambiguous note appeared in the filing:
“In May 2011, in connection with a potential resolution of an investigation by the United States Department of Justice into the use of Google advertising by certain advertisers, we accrued $500 million for the three month period ended March 31, 2011. Although we cannot predict the ultimate outcome of this matter, we believe it will not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.”
Google did not identify the “certain” advertisers, say whether the advertisers also were under scrutiny or were viewed by the government as potential victims. Nor did the firm say when it had come under investigation or how long it had known about the probe.