Google to spend $500 million revamping compliance in shareholder settlement

Yahoo

5 days ago

By Jonathan Stempel
(Reuters) -Google agreed to spend $500 million over 10 years to overhaul its compliance structure, to settle shareholder litigation accusing the search engine company of antitrust violations, settlement papers show.
The preliminary settlement of so-called derivative litigation against officials at Google parent Alphabet, including Chief Executive Sundar Pichai and Google co-founders Sergey Brin and Larry Page, was filed late on Friday.
It requires approval by U.S. District Judge Rita Lin in San Francisco.
The changes include creating a standalone board committee to oversee risk and compliance, previously the responsibility of the Alphabet board's audit and compliance committee.
Alphabet would also create a senior vice president-level committee to address regulatory and compliance issues, reporting to Pichai, and a compliance committee consisting of Google product team managers and internal compliance experts.
Google denied wrongdoing in agreeing to settle.
'Over the years, we have devoted substantial resources to building robust compliance processes," the Mountain View, California-based company said on Monday. "To avoid protracted litigation we're happy to make these commitments."
Shareholders led by two Michigan pension funds accused Google executives and directors of breaching their fiduciary duties by exposing the company to antitrust liability related to its search, Ad Tech, Android and app distribution businesses.
"These reforms, rarely achieved in shareholder derivative actions, constitute a comprehensive overhaul of Alphabet's compliance function," resulting in "deeply rooted culture change," the shareholders' lawyers said.
The changes must remain in place at least four years. Shareholders would not be paid.
Patrick Coughlin, a lawyer for the shareholders, in a Monday interview called the settlement one of the largest by a company to fund regulatory compliance committees.
"We didn't see the board getting the fulsome reports it should have gotten regarding antitrust risks," he said. "There are things it could have done, and should have done, earlier."
The settlement was disclosed the same day U.S. District Judge Amit Mehta in Washington, who last August found Google violated federal antitrust law to maintain dominance in search, completed a hearing to consider how to address the monopoly.
Mehta plans to rule by August. The U.S. Department of Justice has proposed requiring Google to sell its Chrome browser and share search data with rivals.
In a derivative lawsuit, shareholders sue officials on behalf of a company.
The shareholders' lawyers plan to seek up to $80 million for legal fees and expenses, on top of the $500 million.
The case is In re: Alphabet Inc Shareholder Derivative Litigation, U.S. District Court, Northern District of California, No. 21-09388.