Google will spend $500 million over the next 10 years overhauling its compliance system as part of a settlement to clear up shareholder lawsuits. The search engine company was accused of violating antitrust laws.
There will be amendments to establishing a new board committee focused on risk oversight and compliance , which was previously overseen by Alphabet’s audit and compliance committee.
This came after the initial agreement addressed so-called derivative lawsuits against top officials at Google’s parent company, Alphabet. They include CEO Sundar Pichai and co-founders Sergey Brin and Larry Page. This filing took place recently.
US District Judge Rita Lin in San Francisco must still approve the agreement.
Google agrees on a settlement with its shareholders in antitrust lawsuit
The DOJ antitrust lawsuit against Google is pending, but the company has settled with its shareholders over the same allegations.
Shareholders led by two Michigan pension funds had accused executives and directors at Google of dereliction of duties. According to them, this exposed the company to potential antitrust issues related to its search, Ad Tech, Android and app distribution businesses, and advertising technology.
As part of the settlement, Alphabet plans to create a senior vice president-level committee to deal with regulatory and compliance issues and report directly to Pichai. Managers from Google’s product teams and internal compliance experts will also form the compliance committee.
While it may have agreed to this settlement, Google maintains that it did nothing wrong. The Mountain View, California-based company claimed it has invested heavily in building strong compliance mechanisms. Google asserted that it was pleased to commit to avoid prolonged legal disputes .
The shareholders’ attorneys revealed that the changes were rarely seen in shareholder derivative cases, representing a complete overhaul of Alphabet’s compliance efforts. Based on the attorneys’ argument, the changes have been made to a “deeply rooted culture change.”
The changes must stay in effect for at least four years, and shareholders will not receive any payments.
Patrick Coughlin wants to seek $80 million more on top of a $500 million settlement
Patrick Coughlin, a shareholder lawyer, described the settlement in an interview as one of the largest ever made by a company to support compliance committees for regulations.
Coughlin revealed they found that the board was not getting full reports of antitrust risks. “There were actions it could have taken and should have taken much earlier,” he added.
The announcement of the settlement coincided with a hearing by US District Judge Amit Mehta in Washington, who last August determined that Google broke federal antitrust laws to keep its search dominance.
The shareholders’ lawyer intends to seek as much as $80 million for legal fees and expenses on top of a $500 million settlement.
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