Google has reached a $500 million (€348 million) settlement with US prosecutors to resolve a criminal inquiry into its accepting advertisements from sellers of unlicensed drugs.

The payment is one of the largest forfeitures imposed in the US and is a severe dent to Google’s reputation.

Google was aware as long ago as 2003 that it was illegal in most cases for pharmacies in Canada to ship prescription drugs to the US, according to an agreement between prosecutors and Google made public this week.

Google continued to accept the adverts on its AdWords search advertising system, and advised pharmacies on how to make messages more effective until it learnt of the criminal inquiry in 2009, the agreement added.

$500 million represents Google’s revenue from the advert sales and the revenues generated by the pharmacies from their sales. – (Copyright The Financial Times Limited 2011)