Google Commits USD 500 Million to Compliance Overhaul in Shareholder Settlement

Google will spend USD 500 million over the next decade to revamp its compliance structure as part of a settlement in a shareholder lawsuit accusing the company of antitrust violations.

Credit: GOOGLE

The preliminary settlement, filed late Friday, resolves derivative litigation against executives at Alphabet, Google's parent company, including Chief Executive Sundar Pichai and co-founders Sergey Brin and Larry Page.

The agreement, which still requires approval from U.S. District Judge Rita Lin in San Francisco, mandates significant changes to Alphabet’s compliance oversight.

Under the settlement, Alphabet will establish a standalone board committee dedicated to risk and compliance, separating it from the current audit and compliance committee.

The company will also form a senior vice president-level committee to handle regulatory and compliance matters, reporting directly to Pichai.

Additionally, a compliance committee made up of Google product team managers and internal compliance experts will be created.

These reforms must remain in place for at least four years. Shareholders will not receive any financial compensation from the settlement.

Google denied any wrongdoing in agreeing to the settlement.

“To avoid protracted litigation we're happy to make these commitments,” the company said.

The lawsuit was led by two Michigan pension funds, who accused Google executives of breaching fiduciary duties by exposing the company to antitrust risks in its search, Ad Tech, Android and app distribution operations.

Shareholders’ lawyers described the reforms as a “comprehensive overhaul” that would lead to a “deeply rooted culture change” within Alphabet.

Patrick Coughlin, a lawyer for the shareholders, said the board had not received adequate reports on antitrust risks and should have acted sooner.

The settlement was disclosed the same day U.S. District Judge Amit Mehta in Washington concluded a hearing on remedies after ruling last year that Google violated federal antitrust law to maintain its dominance in search.

The U.S. Department of Justice has proposed that Google be required to sell its Chrome browser and share search data with competitors.

The shareholders’ legal team plans to seek up to USD 80 million in legal fees and expenses, in addition to the USD 500 million Alphabet will spend on compliance.

The case is In re: Alphabet Inc Shareholder Derivative Litigation, U.S. District Court, Northern District of California, No. 21-09388.

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• Google to spend USD 500 million over 10 years on compliance reforms

• Settlement resolves shareholder lawsuit alleging antitrust violations

• New compliance committees to report directly to CEO Sundar Pichai

Source: REUTERS