sued Google Inc. (Nasdaq:GOOG - news) and its Internet video-sharing
site YouTube for more than $1 billion on Tuesday in the biggest
challenge yet to the Web search leader's strategy to dominate the
online video market.
The lawsuit accuses Google and its popular online video unit of
"massive intentional copyright infringement," threatening its
ambitions to turn YouTube into a major distributor of entertainment
and outlet for advertising.
Shares in Viacom gained 1.25 percent to $40.07 and Google shares
slipped 1.25 percent to $449.07 in morning trading.
Sumner Redstone-controlled Viacom has been the most vocal critic of
YouTube as it sought to negotiate payment for use of its media
programming.
NBC Universal and News Corp. (NYSE:NWSA - news) have also criticized
YouTube's copyright protection policies but stopped short of taking
legal action.
YouTube does not prevent copyrighted content from being uploaded onto
its site, but it will take material down if contacted by copyright
owners.
"YouTube's strategy has been to avoid taking proactive steps to
curtail the infringement on its site, thus generating significant
traffic and revenues for itself while shifting the entire burden --
and high cost -- of monitoring YouTube onto the victims of its
infringement," Viacom said in a statement.
Viacom filed the suit in the U.S. District Court for the Southern
District of New York, seeking an injunction against further violations
as well as damages.
Google said it was confident that YouTube respects the copyrights at
issue in the Viacom case.
"We will certainly not let this suit become a distraction to the
continuing growth and strong performance of YouTube," Google said in a
statement.
Viacom, home to the MTV and Comedy Central channels, contends that
almost 160,000 unauthorized clips of its programming have been
uploaded onto YouTube's site and viewed more than 1.5 billion times.
The decision to sue Google followed "a great deal of unproductive
negotiation," the company said.
WEB VIDEO RACE
Google bought YouTube last November for $1.65 billion, aiming to
capitalize on its explosive audience growth built from sharing both
homemade and professionally produced videos.
The company said it would introduce technology to help media companies
identify pirated videos uploaded by users, but has not given a firm
timetable.
Viacom and peers like NBC Universal are also investing heavily in
their own Internet video sites in an effort to benefit from the
migration of television audiences to the Web.
"Viacom's Web traffic is increasing nicely since it pulled content
from 'GooTube,"' said Richard Greenfield, analyst at Pali Capital.
"There is certainly an opportunity for YouTube to do a deal with
Viacom, but Viacom does not have to have a YouTube deal," Greenfield
said.
Google's dominance in Web search had already made it a magnet for
lawsuits by copyright and trademark holders.
The Silicon Valley company faces outstanding lawsuits in the United
States and Europe by major book, magazine and online news publishers
as well as small-time Web site operators.
Google has prevailed in high-profile suits against it by auto insurer
GEICO over trademark infringement and in a demand by the U.S. Justice
Department that Google comply with a request for consumer Web search
data.
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