Thursday, December 20, 2007

Google, Yahoo, Microsoft pay up in ad suit

The three largest Internet companies have agreed to pay a combined $31.5 million to settle federal civil allegations they took ads for illegal gambling, the U.S. Attorney for eastern Missouri said Wednesday.

Microsoft (MSFT, Fortune 500), Yahoo (YHOO, Fortune 500) and Google (GOOG, Fortune 500) also agreed to stop accepting ads for sports wagering and other online gambling, U.S. Attorney Catherine Hanaway said.

The investigation, conducted by Hanaway's office, along with the IRS and the FBI, dates to 2000, she said. Negotiations have been going on for 12 to 18 months, she said.

"This is a very profitable business that had a lot of money to spend on marketing," Hanaway said of the online gambling firms advertising on the Web.

All three companies said they stopped taking the ads years ago.

"I do think it will have a major impact, Hanaway said. Obviously these are three of the largest online organizations in the world."

Microsoft's $21 million portion of the settlement includes a $4.5 million forfeit, $7.5 million to be paid to the International Center for Missing and Exploited Children and $9 million in public service ads over a three-year period starting next year.

The public service campaign will be aimed at informing users, especially those of college age and younger, that online gambling is illegal.

Microsoft said it stopped accepting ads from sites associated with online gambling nearly four years ago.

"This agreement reflects our ongoing commitment to online safety," the company said in a statement. "We're hopeful that our educational campaign will stop young people from gambling before they start."

Yahoo's $7.5 share of the settlement includes a $3 million forfeiture and $4.5 million in public service ads over three years.

"Yahoo stopped accepting online gambling advertisements years ago, and after the U.S. Attorney's office contacted Yahoo with its concerns, we worked cooperatively over several years to reach this settlement," spokeswoman Kelley Benander said in a statement.

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