Google recently agreed to pay $500m to the federal government to settle an investigation focusing on its previous allowance of Canadian pharmacies to advertise to Americans, thus violating federal laws regarding illegal importation of prescription drugs into the US.  This amount was agreed upon based on the revenues Google earned from the advertisements, and earnings generated from the sales of the illegal pharmaceuticals from 2003 to 2009.

Now, to add insult to injury, at least three separate lawsuits have been filed against Google by various stockholders, alleging that Google “breached their fiduciary duty to shareholders” by allowing these practices.  Many suspect that these actions were intentional, especially considering that Google only allowed such advertisements from Canadian pharmacies, while barring pharmacies from other countries.

It could be that Google had no idea that this was going on, at least not at first.  After all, this behemoth company has been working on making everything automated, relying heavily on algorithms, which creates cracks through which things like this can slip.  This is how they have gotten ahead, by making their services as streamlined and efficient as possible.  However, this is where the age-old quandary of quality vs. quantity comes into play.

Yes, Google does what they do very well.  However, it is this writer’s assertion that maybe bigger is not better, especially when it comes to the nuanced world of advertising.  Indeed, it could be that smaller, more agile and focused marketing and remarketing companies have a greater likelihood of success in this arena, if for no other reason than because they take the time to provide more individualized attention and service to their clients and potential consumers.

Rather than taking a one-size-fits-all approach, perhaps it would behoove Google to rely less on algorithms and more on humans.  They would not be able to maintain their stranglehold on the Internet as they have lately, but they would also not have so many mistakes—if indeed this whole debacle was an unfortunate mistake—and their shareholders would be happier and less likely to sue them as a result.

I don’t know how everything will turn out with regards to this incident.  Will more shareholders sue?  Will the damage caused to Google’s reputation worsen?  At present, the cost of Google stocks remains stable and few of its investors are complaining.  However, if this was indeed a mistake, what’s to stop it from happening again?  Perhaps they should work to live up to their 2004 prospectus:

“Don’t be evil. We believe strongly that in the long-term, we will be better served — as shareholders and in all other ways — by a company that does good things for the world even if we forgo some short term gains. […] You can make money without doing evil.”

Just a thought.


[photo credit: Aaron Edwards]