Does Google Have Any 'Good Faith' Left?
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Analysis: Google has 30 days to respond to a $1 billion suit brought by media giant Viacom yesterday. It's only defense: good faith. The question is does the search engine giant have any left?
The suit alleges that Google's YouTube strategy has been to avoid taking proactive steps to curtail copyright infringement on its site. Viacom asserts that Google has intentionally allowed viewers to access 160,000 Viacom clips on YouTube over 1.5 billion times.
Google did not respond to requests for comment.
According to industry watcher and Forrester new media analyst James McQuivey, Google's only defense comes under the Digital Millennium Copyright Act. Google will argue that it did not put Viacom's copyrighted content on YouTube and that when it was asked to remove the videos, it did.
"It's all about good faith," McQuivey told internetnews.com.
But when it comes to policing copyright infringement, Google just might not have enough good faith in reserve. Take, for instance, the fact that the company took money from Brandon Drury and Luke Sample, former owners and operators of easydownloadcenter.com and other sites designed to profit from systematic copyright infringement.
According to a 2005 complaint against Drury and Sample, filed in the U.S. District Court of New York by lawyers from the major studios, Google lent an air of legitimacy to the movie pirates' Web sites by displaying sponsored links to next to search results for film titles, including films still in theaters. Some published reports say Google was paid $809,000 for advertising the pirate Web sites.
Considering that windfall accounted for nearly 74 percent of Drury and Sample's ill-gotten gains, as published reports suggest was revealed in court testimony, it might be difficult for Google to argue it's made it a good faith priority not to profit from copyright infringement, McQuivey said.
Bad faith begets more bad faith, too.
If Google finds itself vulnerable to a $1 billion lawsuit, shareholders might come to question the company's $1.6 billion YouTube buy altogether and begin to take a harder look at why the company paid so much for all this trouble.
And when they do look closer, investors might not be happy to know that Michael Moritz, a general manager at YouTube's venture capital backer, holds a seat on Google's board.
Moritz's firm came away from the YouTube buy with 941,027 shares of Google stock worth approximately $444 million.
Such a deal isn't illegal, but once you start losing good faith, it can be hard to keep any at all.