Viacom Steps Up Pressure on Google in Lawsuit

Steve Bosak, newsfactor.com Wed Jul 23, 12:27 PM ET

Media giant Viacom took its fight to the public this week seeking to outline battle lines in its $1 billion lawsuit against YouTube's parent, Google. Viacom filed the lawsuit in March 2007 alleging that YouTube purposefully allowed Viacom's copyrighted content to be distributed on the site. The suit was filed after negotiations between Google and Viacom over licensing content fell apart.

Viacom's CEO Phillipe Dauman took jabs at his opponent at a San Francisco press conference. He expressed disappointment in Google's management of YouTube, citing numerous copyright violations still on the site months after negotiations with Viacom.

Was it Deliberate?

While some observers point to a problem in YouTube's architecture for weeding out and blocking protected content, others believe YouTube and Google were intentionally lax in keeping such Viacom plums as the Daily Show, South Park, and other TV shows. Google maintains it is working on better filtering software to remove copyright-protected videos.

Dauman said he thinks Google purposefully allowed the piracy to continue so YouTube would grow. Google did not step in to curtail the copyright infringements until YouTube dominated the market, Dauman said. YouTube has more than 70 million views per month.

In its suit Viacom asked for the release of YouTube user information to track how often its copyrights were violated. Both parties have since agreed to drop this requirement, even though a judge ruled that Google should comply. Some analysts point to this as a sign the companies may be seeking a settlement.

Expensive Litigation

The lawsuit is causing a bleeding of cash -- Google's stock price dropped 12 percent on July 17, in part due to the costs of defending itself in the Viacom suit. Analysts estimate the lawsuit has cost Google tens of millions of dollars and it threatens the viability of YouTube, which is predicting it will fall short of its ad-revenue estimates.

Google's third-quarter results are due Thursday. Analysts want to see how the company is fairing in a sluggish U.S. economy, with some predicting gains as Google's revenue increasingly comes from overseas versions of its search engine. The market share for the Mountain View, Calif.-based search giant could to rise to 62 percent, according to some reports.

The company also reported it increased research and development 65 percent this year. Financial earnings estimates for the quarter are pegged at more than $4 a share, with most financial analysts bullish.

The Yahoo-Microsoft drama currently playing out is also seen as good news for Google, as Microsoft is still far behind Google in the online ad business.