Google has quietly disclosed that it has been the subject of an investigation by the Department of Justice into its advertising program.
The search giant revealed very few details about the investigation in a regulatory filing with the SEC. However, it's clear that Google thinks the investigation could be costly because it has set aside $500 million from its first quarter income for a potential settlement.
"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," Google said in the regulatory filing. "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."
This investigation was not something that Google included in its Q1 earnings report last month. The search giant has now modified its earnings report, dropping its GAAP net income from $2.3 billion to $1.8 billion. The change means that Google only earned $5.51 per share, rather than the $7.04 it reported last month. That's far below analyst expectations.