Special Report Google has won a crucial battle in its campaign to keep under wraps millions of documents relating to an FBI drugs probe into the company. And the web giant has done so using a law designed to combat porn sites.
At least 20 US states, led by Mississippi’s elected state prosecutor, opened a probe to find out whether Google was complying with the outcome of a sting operation combating illegal ads for drugs online. The advertising giant had to settle out of court in 2011 after it was accused of running adverts in the US for dodgy drugs peddled by Canadian pharmacies.
Yet the states’ enquiries into that settlement are now blocked until a new ruling can be overturned.
Google won an injunction in the Southern District of Mississippi federal court on 3 March which prevents the state's attorney general, Jim Hood, from pursuing an investigation against Google.
It also stops him from bringing civil or criminal charges against the ad giant for "making accessible third-party content to Internet users". In plain English, this injunction stops Hood from pursuing allegations that Google turned a blind eye to ad revenues coming from dodgy pharmacies peddling controlled drugs to consumers without prescriptions.
Google assured a court in 2011 that it was stopping the practice.
The injunction is a big setback for Hood, who is leading efforts to uncover an explosive cache of court documents which supposedly reveal how top Google executives knew about the dodgy pharmacies' ad spending and turned a blind eye to it.
The good, the bad and the Googly
In recent decades state prosecutors have led the way in corporate criminal cases, with Big Tobacco lawsuits and New York state’s dot-com bubble Wall Street settlements amongst the most prominent examples.
Hood, Mississippi’s corporate crime fighter (dubbed “the last Democrat in Dixie”) has tangled with various financial giants, pharmaceuticals companies and even the Ku Klux Klan, bringing some $850m of fines into his state's coffers. Mississippi is the poorest state in the USA.
In 2013 Hood was also one of 23 state attorneys who wanted to know whether Google was complying with an out-of-court legal settlement on drugs marketing which it had signed in 2011. In the settlement (a “non prosecution agreement”, or NPA – full document, PDF, 15 pages), Google agreed to pay a $500m forfeiture and promise not to help sellers of fake and re-imported drugs without seeing proof of age or a prescription.
Hood has claimed (PDF, one page) that despite the half-a-billion dollar forfeiture, Google was refusing to delist the fake pharmacies. Google allegedly shifted the business from Adwords to YouTube and continued to promote the sale of controlled substances to minors. So the allied states issued a 79-page subpoena.
"The attorneys general have asked Google to clean up its act, and it's done nothing but obfuscate," said Hood in 2013, after their letters and requests to meet were ignored. Last year the attorneys subpoenaed Google for documents relating to the 2011 out-of-court settlement. Significantly, a number of documents held by Rhode Island state, relating to the FBI/FDA sting operation on Google which led to the half-billion payout and NPA, have never been made public.
In December Google used the Communications Decency Act (CDA) to bring the states’ probe to a halt. The CDA had been rushed onto the books in 1996 after the first “cyberporn panic” in order to criminalise sexual and obscene websites. It was rapidly struck down for being overbroad and violating the First Amendment. Ironically, given that the CDA is being used to block investigations into the Internet’s most powerful company, the law began life as the “Internet Freedom and Family Empowerment Act”.
Google's “aggressive and overbroad” use of the CDA worries some legal experts. If Google succeeds in this battle – and it has won the first round – “then it would also prevent the Federal Trade Commission from enforcing analogous federal laws against Internet intermediaries. Such practices could include fraud, conspiracy, and aiding-and-abetting violations of state and federal controlled substances acts,” says one expert in a must-read analysis of Google’s blocking lawsuit, published in the American Spectator.
In other words, companies like Google could - if it wins this legal war - operate beyond the reach of the law. Even Goldman Sachs, at its multi-tentacled zenith, couldn’t dream of such a privilege.