Google has agreed to allocate $500 million over the next ten years to enhance its internal compliance systems, according to settlement documents filed late Friday.
The move comes in response to a shareholder lawsuit accusing top executives at Alphabet—Google’s parent company—of exposing the firm to antitrust risks. Those named in the suit include CEO Sundar Pichai and company co-founders Larry Page and Sergey Brin.
The case, filed as a derivative lawsuit, allows shareholders to sue on behalf of the company itself. The proposed settlement, which still requires approval from U.S. District Judge Rita Lin in San Francisco, does not involve any admission of wrongdoing by Google.
The lawsuit was brought by two Michigan pension funds, who argued that Alphabet’s leadership failed to safeguard the company from mounting antitrust liabilities tied to its search engine, ad technology, Android platform, and app distribution services.
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Alphabet Unveils Sweeping Compliance Overhaul
As part of the agreement, Alphabet will implement a number of significant internal reforms. A new, independent board committee will be created to handle risk and compliance oversight—separating this responsibility from the existing audit and compliance committee.
Furthermore, the company will form a senior vice president-level group to focus on regulatory matters, reporting directly to Pichai. A compliance team made up of product managers and internal specialists will also be assembled to reinforce accountability across departments.
“Over the years, we have devoted substantial resources to building robust compliance processes,” the company said in a statement on Monday. “To avoid protracted litigation we’re happy to make these commitments.”
Attorneys representing the shareholders praised the measures, calling them rare and far-reaching. “These reforms, rarely achieved in shareholder derivative actions, constitute a comprehensive overhaul of Alphabet’s compliance function,” they said, predicting a “deeply rooted culture change.”
The new governance structure must remain in place for a minimum of four years. While the shareholders will not receive a financial payout, their legal team intends to seek as much as $80 million in attorney fees and expenses.
Patrick Coughlin, one of the lead attorneys for the plaintiffs, remarked, “We didn’t see the board getting the fulsome reports it should have gotten regarding antitrust risks. There are things it could have done, and should have done, earlier.”
The settlement was revealed the same day U.S. District Judge Amit Mehta wrapped up hearings on remedies following his earlier ruling that Google violated federal antitrust law.
The U.S. Department of Justice is pushing for Google to divest its Chrome browser and share its search data with competitors. A final decision is anticipated by August.
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