US Shakes Down Microsoft, Google, and Yahoo for $31 Million

by Lou on December 21, 2007

When I was a kid growing up in Brooklyn, the Mafia did a ruthlessly effective job of collecting protection money from small businesses in the neighborhood. Bakers, butchers, bars, and others—they all paid their tithe to the local collector.

It was a nuisance, to be sure, but small potatoes when measured against the latest version of protection rackets: The shakedowns conducted by the US government. US Attorney Catherine L. Hanaway (pictured right), in a role befitting the boss of bosses, announced in a press release that Microsoft Corporation, Google, Inc. and Yahoo! entered into settlements with the US to resolve claims that they promoted illegal gambling. The total amount of the three settlements—or should I say shakedowns—is $31.5 million.

Running a Protection Racket: The Mafia Was Small Potatoes Compared to the Feds
While the mob’s take back in the day amounted to sums that were measured individually in the hundreds, and possibly the thousands for businesses that could afford to pay that kind of freight and didn’t have the cojones to stand up to the local mob collector. Even allowing for inflation over time, the government has raised the shakedown scheme to a level undreamed of by neighborhood capos of old.

If You Don’t Have the Balls to Stand Up to Them, the Bully Will Run Right Over You
It appears that Microsoft, Google, and Yahoo are severely lacking in the cojones department too. They absolutely rolled over and submitted to the big bully, instead of standing up and saying,”C’mon, bring it. Charge me with a crime,” then watching as the US government turned tail and scarpered off, because they’ve never charged anyone with online gambling offenses except in cases that violate the wire act—and that doesn’t apply to online poker.

Microsoft, Google, and Yahoo: Groveling Like Bitches on a Leash
Microsoft paid out $21 million: $4.5 million to the United States and a $7.5 million contribution to the International Center for Missing and Exploited Children (ICMEC) to establish a fund to assist ICMEC with its national and international mission. They also agreed to provide a $9 million online, public service advertising campaign to inform and educate a target audience comprised of college level or younger people that online gambling enterprises are illegal under U.S. law. The educational—or perhaps “indoctrinational” is a better word for it—campaign will run for three years, beginning in early 2008. This settlement, based on illegal conduct that Microsoft Corporation neither contests nor admits, resolves claims that between 1997 and June 2007, Microsoft received payments from on-line gambling businesses for advertising on-line gambling.

Google got off cheap, settling out for $3 million to resolves claims that they also neither contest nor admit that they received payments from on-line gambling businesses for advertising on-line gambling between 1997 and June 2007.
The Yahoo! settlement of $7.5 million also resolves claims, which they neither contest nor admit that they received payments from on-line gambling businesses for advertising on-line gambling between 1997 and December 2007. The company has now forfeited $3 million directly to the United States. Yahoo! Also agreed to provide $4.5 million worth of online advertising for a public service advertising campaign. The campaign, to begin January 2008, will tell users that operators and participants in online or telephonic sports bookmaking and casino-type gambling activities doing business in the United States may be subject to arrest and prosecution.

These settlements involve corporate conduct the Government found in violation of the Federal Wire Wager Act, federal wagering excise tax laws and various states’ statutes and municipal laws prohibiting gambling. Unregulated commercial gambling is illegal throughout the United States.

Take My Lunch Money Mr. Schoolyard Bully, But Please, Don’t Hit Me…
This, of course, is subject to challenge. Microsoft, Yahoo!, and Google simply gave their lunch money to the schoolyard bully, figuring that paying protection would keep them from a bloody nose on the way home from school.

Hanaway’s Spin…
According to Hanaway, “Honest taxpayers and gambling industry personnel who do follow the law suffer from those who promote illegal online behavior.”

…And Mine
Get up, Microsoft, Google, and Yahoo! Get on your feet. What kind of wusses are you? Stop groveling. Stand up to the government and maybe you’ll have the rights you deserve. If you don’t stand up to them they’ll take your lunch money again, and again, and again, in myriad ways, time after time, until they bleed you into abject submission or you decide that enough is enough and decide to fight back.

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