Google, Viacom Face Off Over YouTube
Monday, July 16, 2007; 8:07 AM
SUN VALLEY, Idaho -- Tensions between technology and media companies are usually humming just beneath the surface during a weeklong retreat for top CEOs that this cozy mountain resort hosts every year, but this week a marketplace clash between Viacom Inc. and Google Inc. just couldn't be kept down.
Viacom, a major media conglomerate that owns the MTV, Comedy Central and Nickelodeon cable networks, has hit Internet search leader Google with a $1 billion lawsuit, saying that Google's popular video-sharing site YouTube is a massive center of copyright infringement, routinely displaying clips from Viacom shows such as "The Daily Show With Jon Stewart."
The conflict has huge implications for the future of both media and technology companies as a legal ruling could help set standards for how video and other kinds of media are distributed over the Internet, a trend that is in its early stages but growing rapidly as people increasingly go online for entertainment, and advertising dollars follow them.
Google's CEO Eric Schmidt said he believed his company was acting within the law and promised to defend itself vigorously. Schmidt held court with a group of reporters well into the night on a hotel terrace Thursday during a conference of top-level media executives that the Allen & Co. investment bank has organized in Sun Valley since the early 1980s.
Schmidt also said Viacom was "built on lawsuits ... look at their history," he said, referring to a series of legal battles Viacom engaged in when it was still a small chain of movie theaters in order to secure the distribution of first-run films. Schmidt pointed to the fact that Viacom was currently being run by a former general counsel of the company, Philippe Dauman.
Viacom's chairman and controlling shareholder, Sumner Redstone, didn't dispute Schmidt's characterization of his company has having had a history of taking its business beefs to the courts.
"We have engaged in a lot of litigation at Viacom, of which I have been a primary mover," Redstone told a group of reporters Friday morning, responding to a question about Schmidt's characterization.
Redstone, who started his own career as a lawyer, noted several major legal battles his company has engaged in previously, including against cable TV pioneer John Malone, media and cable giant Time Warner Inc., and against longtime Hollywood mogul Barry Diller.
But Redstone insisted that he resorted to lawsuits only if absolutely necessary. "The bottom line is I hate to fight," Redstone told a group of reporters gathered on the steps of a Sun Valley hotel building, in front of a quiet pond where swans were nesting.
"I don't enjoy a battle," Redstone said. "I would rather be a lover than a fighter."
The stakes are high for both Google and Viacom in the dispute over YouTube, a hugely popular amateur video-sharing Web site that Google bought a year ago for about $1.7 billion. As it happens, YouTube co-founder Chad Hurley was the hit of last year's Sun Valley conference, but didn't attend this year.
Viacom claims that Google is willfully violating its copyrights by allowing users to upload clips from Viacom's TV shows. Google counters that it's obeying the law by immediately responding to requests from Viacom and other copyright holders to take down any material found to be infringing.
The lawsuit is in its early stages, and the companies are still trying to find a way to work together. Redstone declined to comment on how those discussions were going, but he did note that he had attended a cordial dinner gathering Thursday evening that included John Malone, a target of one of his previous legal battles. Redstone noted that he prevailed in that fight, and said Malone referred to him over dinner as a "good antitrust lawyer."