Category: Legal Troubles

Do no evil…. pay no taxes….

Google is moving even more money through a shell corporation in Bermuda—reaching a total of €8.8 billion ($11.91 billion) in 2012, 25 percent more than it did in 2011. By employing a legal yet ethically questionable practice, Google is saving itself billions in taxes worldwide.

The new figures were first reported by the Financial Times on Friday, citing “[recent] filings by one of Google’s Dutch subsidiaries.” This widespread strategy of moving money around involves two specific tactics known as the “Dutch Sandwich” and the “Double Irish.” (Ars obtained a copy of this filing, dated September 27, 2013, from an anonymous source.)

As the Times concluded, these disclosures mean “that royalty payments made to Bermuda—where the company holds its non-US intellectual property—have doubled over the past three years. This increase reflects the rapid growth of Google’s global business.”

Google’s tax avoidance practices may be good for Google’s bottom line, but they are not responsible. Companies that claim to be good corporate citizens don’t use tax loopholes and accounting tricks to dodge taxes on a grand scale like Google and other tech giants do.

Google, of course, is only following in the footsteps of companies like Microsoft and Apple, which also distribute proprietary software and dodge state and federal taxes in the United States, plus taxes overseas. These feats of tax avoidance are made possible by rigged tax codes, which allow chief financial officers to get their companies out of tax obligations, to the detriment of society. Is it any wonder that income inequality has gotten so much worse over the past few years? Companies like Google are prosperous and powerful, but they don’t pay what they owe. That means regular folks are left to foot more of the bill for infrastructure investments that companies like Google wish to see made.

If Google wants college to be affordable, or for fiber to reach more Americans, it ought to pay its taxes without complaining or shuffling money through shell companies.

Oops… big oops…

A Google Street View car hit two public transport buses and a truck in the city of Bogor, Indonesia.

Police said the car driver hit the first bus, appeared to “panic” when the bus driver responded angrily, and tried to drive off.

But in doing so the vehicle hit a second bus and then the truck, according to local media reports.

It is unclear whether anybody was hurt at the scene. Google has confirmed that an incident has taken place.

“We take incidents like this very seriously. We’re working closely with local authorities to address the situation,” Vishnu Mahmud, head of communications for Google in Indonesia, told news agency AFP.

Uh huh.

This car was apparently being driven by a human being, as opposed to being piloted by a computer, so it appears human error is to blame. Of course, humans write software, so self-driving cars are capable of crashing too… when and if that happens, it’s going to be really embarrassing for the Monster of Mountain View.

Good to see more regulatory scrutiny:

India’s antitrust regulator has launched a probe against Google Inc over alleged anti-competitive practices by the U.S. Internet search giant, following a complaint by a consumer advocacy group, a federal minister said on Monday.

The Competition Commission of India (CCI) has received information about contravention of an Indian competition rule by Google, R.P.N. Singh, minister of state for corporate affairs, told lawmakers in a written reply to a question, according to a government statement.

Google has already been subjected to antitrust probes in the United States and Europe.

The Monster of Mountain View has historically been dealt with very leniently by the United States federal government. European regulators have taken a much harder line with the company, especially when user privacy has been threatened. Google has also reportedly caught the attention of authorities in Argentina and Korea.

Since its launch more than a decade ago, Google has morphed into a very successful commercial version of the National Security Agency (NSA). The only reason it is viewed more favorably than the NSA is because it has a more benevolent (though undeserved) reputation. It’s time for people to realize that trusting Google with the details of their lives is a bad idea.

The Federal Communications Commission isn’t getting answers from Google (surprise, surprise!) in response to an inquiry launched as a response to the “Wi-Spy” scandal, so the agency has just hit the Monster of Mountain View with a fine.

It’s tantamount to a slap on the wrist, but at least it’s something.

Google Inc. (GOOG) “impeded” and “delayed” a U.S. inquiry into its data collection, according to the latest in a series of regulatory probes of the company’s privacy practices.

The Federal Communications Commission is seeking a $25,000 fine after examining how Google gathered personal e-mails, text messages and other materials through its Street View location service, the agency said in an April 13 filing. That is the maximum penalty for failure to cooperate with an investigation, Tammy Sun, an FCC spokeswoman, said in an interview yesterday.

If only the FCC could tack on more zeros to the amount of the fine… maybe then Google would start to take the agency’s investigation seriously.

It looks like Google critic David Brandt was right about Google being in bed with rogue online pharmacies. Here’s the Department of Justice:

Online search engine Google Inc. has agreed to forfeit $500 million for allowing online Canadian pharmacies to place advertisements through its AdWords program targeting consumers in the United States, resulting in the unlawful importation of controlled and non-controlled prescription drugs into the United States, announced Deputy Attorney General James M. Cole; Peter F. Neronha, U.S. Attorney for the District of Rhode Island; and  Kathleen Martin-Weis, Acting Director of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA/OCI).  The forfeiture, one of the largest ever in the United States, represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google’s AdWords program, plus gross revenue made by  Canadian pharmacies from their sales to U.S. consumers.

As part of the settlement, Google also agreed to an admission of wrongdoing.

It looks like justice has been served. This is a pretty steep fine. Obviously, DoJ investigators were able to find strong evidence that Google was flagrantly breaking the law, or Google wouldn’t have settled the charges. The cost of the settlement has already decreased Google’s quarterly profit by 22%, after the company set aside the money it anticipated having to pay the feds.

“This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google’s knowledge and assistance, into the United States, directly to U.S. consumers,” said U.S. Attorney Neronha. “It is about taking a significant step forward in limiting the ability of rogue on-line pharmacies from reaching U.S. consumers, by compelling Google to change its behavior.   It is about  holding Google responsible for its conduct by imposing a $500 million forfeiture, the kind of forfeiture that will not only get Google’s attention, but the attention of all those who contribute to America’s pill problem.”

LGB applauds the United States government for holding Google accountable in this case. Perhaps this investigation will cause the Monster of Mountain View to think twice before breaking the law in the future.

Google issued a short, meek statement on the settlement and then refused to comment further. The statement read:

We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago… However, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place. Given the extensive coverage this settlement has already received, we won’t be commenting further.

It actually took Google years to get around to banning rogue online pharmacy ads. Google’s competitors took such actions back in 2003, but Google did not follow suit. Instead, it behaved unethically and illegally. Now it will pay the price.

Finally!

Since April when Bloomberg News reported that the Federal Trade Commission was contemplating a full-blown antitrust investigation of Google, people who follow the Internet giant have been waiting for the other shoe to drop.

It did on Thursday with the report in the Wall Street Journal that the five-member Commission is about to serve Google with civil subpoenas — known as Civil Investigative Demands — about its business practices.

The European Union and the State of Texas are already investigating, but word of the FTC probe raises the issue to a new level of intensity. It also makes it clear that millions of dollars spent on lobbying and the hobnobbing by Google executives at White House State Dinners will not prevent a long needed investigation.

This investigation should have been launched years ago. The FTC has been missing in action for some time, but better late than never. There are, of course, tech pundits out there mocking this announcement, suggesting that Google won’t be nearly as powerful as it is now by the time this investigation has been completed. Many have cited Microsoft as an example.

But part of the reason Microsoft’s influence diminished is precisely because of the antitrust probe and subsequent antitrust lawsuit. The very existence of this probe should serve as a check on Google’s power, and that is a very good thing.

Consumer Watchdog is asking the White House to keep its distance and not meddle with the investigation and other existing (but smaller) probes of Google’s business practices that are already going on.

The Monster of Mountain View’s monopolistic practices are finally drawing a response:

The top European antitrust regulator opened an investigation into Google on Tuesday to examine allegations that the Internet giant has abused its dominance in online search.

The decision follows complaints by specialized search-related companies about “unfavorable treatment of their services in Google’s unpaid and sponsored search results,” the European Commission said in a statement.

The commission said it was also looking into whether Google might have given its own services “preferential placement” in search results. In addition to its search engine, Google has a growing number of other online businesses, including mapping, translation, video and electronic commerce services, many of which, like the search engine, are supported by advertising.

Google’s tendency to give its own services preferential placement in search results appears to be an internal policy. It’s already been well-documented by critics. From Google’s perspective, cross promotion makes a world of sense. The growth of Google’s spyware-laden browser, Chrome, has been mostly driven by Google’s own Internet properties, including YouTube and Blogger, where users are encouraged daily to try Chrome. Most people who download Chrome have absolutely no idea what the implications are for their privacy and security.

Aggressive cross-promotion is also what got Microsoft in trouble years and years ago. Microsoft used its Windows operating system to destroy the market for Netscape Navigator, by giving Internet Explorer away for free and then bundling it into Windows as the default browser. Microsoft managed to survive its own antitrust investigation, but the legal battle and other circumstances took a toll on Microsoft’s stock, which is still limping along nearly a decade later.