Getty Images
Google settlement may affect DOJ antitrust remedies
Google faces numerous antitrust challenges and has agreed to spend $500 million revamping its regulatory compliance structure in a settlement with shareholders.
Google will spend the next ten years revamping its regulatory compliance structure -- a move that may influence remedies the company will ultimately face as a result of two U.S. Department of Justice antitrust lawsuits.
Years of compounding antitrust investigations and lawsuits, including the DOJ's online search and digital advertising antitrust lawsuits, led to shareholders filing their own lawsuit against Google over antitrust concerns. Google settled the shareholder lawsuit in May, agreeing to invest $500 million over the next ten years to redo its regulatory compliance structure.
Although Google did not admit to any wrongdoing in the settlement, it agreed that the settlement was in the best interests of the company, stockholders and employees. Google said it chose to enter into the settlement to avoid the uncertainty, disruption, risk and expense of further litigation.
By entering into the shareholder settlement, Google is also demonstrating to the government changes it's willing to make to address antitrust concerns, said Christopher Robertson, partner at law firm Seyfarth Shaw LLP. The DOJ has proposed breaking up parts of Google in both antitrust cases, a significant measure that would require Google to sell parts of its business, such as Android, Chrome and its ad manager.
"Making the kind of changes that the government would want to see so they don't have to go through this again is a far more significant concern, I am sure, than dealing with these private plaintiffs and private shareholders," Robertson said. "My sense of it is, is that the changes they're going to make as part of the shareholder suit are changes they would be making, if not in total, in large part, to address the government's concerns anyway."
Indeed, Google was likely already planning to make changes due to the substantial number of antitrust threats facing the company, said William Kovacic, law professor and director of the Competition Law Center at The George Washington University. He said the development of Google's new compliance process could be relevant to how remedies in the DOJ antitrust cases are carried out.
"When you look at the abundant number of matters involving antitrust that confront the company globally, truly dozens, when you have everybody coming at you, that probably inspires a rethink of your entire compliance framework out of necessity," Kovacic said.
Google agrees to changes as DOJ antitrust remedies loom
Shareholder lawsuits against companies periodically occur if companies are facing significant state, federal and global lawsuits over issues including antitrust, Robertson said.
In Google's case, shareholders identified a lack of antitrust governance, which made the tech giant vulnerable to the DOJ's lawsuits.
"What an external lawsuit or government investigation allows the shareholders to do is target what components of the company's corporate governance, oversight or management they're going to focus on in terms of saying 'this is where we think as shareholders these changes need to be made,'" Robertson said.
Robertson said the shareholder settlement and DOJ antitrust remedies discussions are "not happening in isolation. " Google will point to changes the company has committed to making in conversations with the government.
"Ideally, you come up with a settlement that satisfies the government's interests, satisfies the court and satisfies the shareholders," Robertson said. "Then everyone can move on."
In the settlement, Google agreed to add compliance specialists to evaluate new areas of compliance risk facing the company, including competition. Google will also employ a risk-based strategy to analyze its current compliance measures and minimize regulatory risk.
Google will also evaluate internal tools to help the company comply with laws, rules and regulations. It has also committed to more accurate, transparent compliance reporting for regulators, customers and competitors.
Over the years, allocating resources including personnel to provide documentation for supporting litigation in numerous lawsuits, is an "enormous tax on the company's operations," Kovacic said.
"I think it's inevitable that you step back and say, 'we have to rethink our compliance program and our whole approach to dealing with regulatory risk,'" Kovacic said.
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining Informa TechTarget, she was a general assignment reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
