Report rips Microsoft over Bing's sponsored online drug ads

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Microsoft Corp. profits by selling online ads on its search engine to criminal gangs running pharmaceutical Web sites that offer medication to people without a proper prescription, according to a new study.

Some 89.7% of the pharmacies paying for ads on the company's latest search engine, Bing.com, are fraudulent or engaged in illegal activity, according to the report. KnujOn, an antispam company, and LegitScript, which offers a service that verifies the legitimacy of particular online pharmacies, issued the report.

Microsoft, as well as other search companies such as Yahoo Inc. and Google Inc., require pharmacy sites that pay for advertising to be verified by a company called PharmacyChecker, which would appear to be a competitor of LegitScript.

KnujOn and LegitScript said their report will be the first in a series about U.S. companies that profit from rogue pharmaceutical sites. The report highlights 10 notable pharmacy sites, some of which are believed to be connected with Russian criminal gangs.

The Internet is rife with Web sites offering every imaginable drug, and pharmaceutical junk mail is one of the most prevalent spam categories. Some Web sites will ostensibly send medication to patients without a prescription, which is illegal under U.S. law, or ship drugs from overseas locales, such as India, which is also against U.S. law.

Microsoft said it is investigating the report.

Microsoft as well as its main competitor, Google Inc., use auction systems to sell text ads that are related to the search terms someone uses. Rogue pharmacies can distort those rates, causing more revenue to flow into Microsoft's coffers on the back of illegal activity.

"Auction rates can be driven artificially higher if rogue Internet pharmacies selling counterfeit or unapproved prescription drugs are allowed to participate in search engine ad programs," the report said. "It is generally well-accepted that corporations like Microsoft have a responsibility -- certainly a moral one, and probably a legal one -- not to knowingly facilitate, much less profit from, activities that are dangerous, deceptive or unlawful."

The conclusions of KnujOn and LegitScript were based on an analysis of Microsoft's paid search results starting in June 2008, when Microsoft's search engine was Live Search. The company replaced Live Search with Bing in late May of this year.

The report notes that Microsoft should have the ability to stop dodgy advertisers from placing ads. However, it also noted that in some cases, paid ads appeared to lead to legitimate online pharmacies but then suddenly redirected to a bad one.

Microsoft's policy is to only allow online pharmacies to advertise if they are licensed in either the U.S. or Canada and require a prescription based on a in-person visit to a medical professional, the report said.

Nonetheless, searches on Bing.com turned up paid results from sites such as Choice-Rx.com, which offers drugs that purportedly come from the Seychelles or India. The Web site's payment processing goes through Panama, which is linked to a Russian company, the report said.

When contacted Wednesday, Microsoft said, "we take these claims very seriously and are currently investigating this issue." While the report singles out Microsoft, searches on Yahoo and Google turned up paid advertisements leading to drug Web sites, many of which look questionable.

According to statistics on LegitScript's Web site, that wouldn't be surprising. The company says it has 41,983 pharmacy sites in its database. Of those, 224 are considered legitimate, with 897 more awaiting a decision.

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