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Google sets aside $500m for ad probe

google_logo_1024x426-2According to a report in the New York Times, the investigation centers on the advertising arm of the company, though the exact details of the situation are not clear. A comment from a Justice Department spokesman was not immediately forthcoming, the report said. Google also declined to comment.

The NYT report said that the Californian company made a filing with the Securities and Exchange Commission on Tuesday which outlined Google’s intention to set aside the sum. The filing said: “In May 2011, in connection with a potential resolution of an investigation by the United States Department of Justice into the use of Google advertising by certain advertisers, we accrued $500 million for the three month period ended March 31, 2011.”

The filing continued: “Although we cannot predict the ultimate outcome of this matter, we believe it will not have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows.”

According to the report, Google said that as a result of it having to set aside the money, the net income for the last quarter was 22 percent lower than it had originally reported, putting it at $1.8 billion (from $2.3 billion).

The issue remains largely a mystery for the time being, as we wait for the conclusion of the investigation by the Justice Department. As the NYT report says, it is not even clear to whom the money might be paid – the Justice Department or advertisers.

This news comes at a busy time for the search engine giant. Also on Tuesday, the company, along with Apple, was up in front of a Senate Judiciary panel defending the way in which it collects data from mobile phones.

On a brighter note for the Mountain View-based company, at its developer conference in San Francisco yesterday, Google unveiled the Honeycomb 3.1 OS, as well as its next mobile smartphone system, Ice Cream Sandwich. A new cloud-based music service was also announced.

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Trevor Mogg
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