Google's top leaders are facing accusations from shareholders who claim they failed to protect the company. The complaint says these executives put Google at legal risk by how they handled its search engine, advertising technology, Android system, and app distribution. PHOTO: REUTERS
In a major move to reshape its internal practices, Google has agreed to invest $500 million over the next decade to improve its compliance systems. This decision comes as part of a legal settlement aimed at resolving shareholder complaints about the company’s handling of antitrust issues.
The agreement was filed in court on Friday, May 30, and still needs final approval from U.S. District Judge Rita Lin in San Francisco. The deal addresses a shareholder lawsuit targeting key Alphabet figures, including CEO Sundar Pichai, and co-founders Sergey Brin and Larry Page. Shareholders claimed these leaders failed in their responsibility by allowing the company to engage in practices that attracted antitrust scrutiny.
As part of the settlement, Google’s parent company Alphabet will introduce major changes to how it monitors risk and follows rules. A new, separate board committee will be formed solely to handle risk and compliance matters—duties that were previously part of the broader audit committee.
The overhaul also includes the creation of a high-level executive team, with a senior vice president reporting directly to Sundar Pichai. This new leadership team will be tasked with keeping Google’s practices in line with regulatory standards. Additionally, a dedicated internal compliance group made up of product managers and legal experts will be set up to handle compliance matters more closely within the company’s product teams.
The changes will remain in effect for at least four years, ensuring the new systems are not just symbolic but lasting. While the company is committing a large sum to make these changes, shareholders will not receive any monetary compensation from the settlement.
This lawsuit falls under what is known as “derivative litigation,” where shareholders sue company leaders not for personal gain but on behalf of the company. In this case, the shareholders were two Michigan-based pension funds, who claimed the company’s leaders put Alphabet at risk by failing to prevent actions that led to antitrust investigations into its search engine, advertising technology, Android system, and app distribution.
In court documents, lawyers for the shareholders called the reforms a rare win in such lawsuits, describing the planned changes as a “complete revamp” of how Alphabet approaches compliance. They argued the agreement would bring about a meaningful shift in company culture and operations.
Although Google has agreed to make these changes, it continues to deny any wrongdoing. The company has yet to release a public statement on the settlement.
Coincidentally, the news came out on the same day a separate federal court hearing wrapped up in Washington. Judge Amit Mehta is reviewing possible penalties after ruling last year that Google broke antitrust laws to preserve its dominance in search. The Justice Department has suggested Google may need to sell off its Chrome browser and open up its search data to competitors.
As part of the Alphabet settlement, lawyers representing the shareholders plan to ask for as much as $80 million in legal fees and expenses. Their request, like the broader deal, awaits court approval.
