There was much in the annual letter to sharpen traditional media’s concern about Google’s intent. User-generated content was “central” to the site’s success, the letter said, and these users would “become the broadcasters of tomorrow.” Page and Brin spoke of their new efforts to sell radio and newspaper advertising, declaring, “Our goal is to create a single and complete advertising system.” This system, they added, was one in which Google was “helping advertisers of all sizes buy and place offline ads more effectively”
A rain of arrows would soon be aimed at Google. Quincy Smith thought this was a mistake. “I’ve never seen a company so loved on Wall Street and by advertisers, yet so despised by media companies,” he said. “Media companies don’t understand that the platform is the business. Google is a platform. They help you monetize your content.” For many media companies, however, this was a risk they were unwilling or unable to take.
CHAPTER NINE. War on Multiple Fronts
(2007)
Once you get to a certain size, you have to figure out new ways of growing,“ said Ivan Seidenberg, CEO of Verizon. ”And then you start leaking on everyone else’s industry. And when you do that, you sort of wake up the bears, and the bears come out of the woods and start beating the shit out of you.“ Seidenberg was speaking of Google, with whom he started jostling in 2007 to prevent Google from entering his mobile phone business. The Verizon bear was now awake to the perceived Google menace, as was Viacom.
Of the two, Sumner Redstone was the more openly belligerent. In late 2006 and early 2007, he demanded that YouTube immediately remove one hundred thousand clips of Viacom’s copyrighted content. Viacom CEO Philippe Daumann became convinced that Google was “very lackadaisical” about the content that appeared on YouTube. He cited Al Gore’s movie, An Inconvenient Truth, which Paramount released and which appeared on YouTube in its entirety. “We got frustrated. We told them to take our content down.” How come, he asked, YouTube could successfully block spam and pornography and hate speech from appearing, yet said it couldn’t block copyrighted Viacom content from being displayed? Redstone, who had long championed the idea that content was king, was furious. He and Daumann resented having to pay what they claimed to be one hundred thousand dollars a month to monitor what appeared on YouTube.
Google countered that only the copyright holder knows what content is under copyright, said Eric Schmidt, citing the Digital Millennium Copyright Act, which makes monitoring a shared responsibility. “The law basically said that the copyright owner monitors, and then we expeditiously remove, and we’ve done that,” he told Wired magazine. “And it’s well documented, because Viacom told everybody that they gave us one hundred thousand video takedowns, which we did very, very quickly. And what was interesting was that our traffic to YouTube has grown very strongly since then. So one of the arguments that they made was that somehow YouTube was built on stolen content, which is clearly false.” He said Google was testing various technologies but had yet to solve the piracy puzzle. Viacom did not believe a technology company could fail to find a remedy-unless it lacked the will.
In March, Viacom filed a lawsuit in federal court charging Google and YouTube with “massive intentional copyright infringement” and asking for $1 billion in damages. Viacom said YouTube effectively stole almost 160,000 clips of its programming and allowed these to be shown more than 1.5 billion times. YouTube’s Chad Hurley doesn’t deny there were copyright infringements, but he insisted they were not deliberate. His argument was twofold: First, YouTube is just “a clip site. We don’t want full programs.” And second, Web videos are so new that “everybody’s still trying to figure it out.” Viacom, he believed, sought clear answers when there were none. Hurley, like top executives at Google, believed the litigious Redstone was using the lawsuit as leverage to negotiate a better deal. Schmidt grows uncharacteristically agitated when Viacom’s suit is mentioned. At a 2008 conference at which Philippe Daumann spoke and castigated Google for stealing copyrighted materials, Schmidt sought me out and growled, “Everything Philippe said was a lie. And you can quote me!”
There were those who recognized Viacom’s concerns yet thought Redstone was wrong. Esther Dyson, an early and prominent investor in digital media, said, “As a business, I think they are behaving foolishly-like the music companies. They are fighting their customers. What they should do is use YouTube as a platform and share in all the revenues.” Those who agree that YouTube is a platform, not a content competitor-including some who work for Redstone but dare not be quoted-think the lawsuit is a declaration of war when what is needed is an agreement that encourages more trial and error.
Many media bears sympathized with Viacom even if they didn’t join the lawsuit. “If we’re putting up programming for free, why should cable or DirecTV pay us for content?” asked Mel Karmazin. And if consumers can get the content online or on iTunes, he said, unless the digital company pays a substantial licensing fee “you’re trading analog dollars for digital dimes.” Moreover, once a copy is made, it is easily duplicated and shared.
Anxiety about piracy was not peculiar to television. On the eve of Viacom’s lawsuit, all the major Hollywood film studios jointly protested that Google was selling keywords such as bootleg movie download or pirated for two Web sites it knew to be illegally downloading their movies. Google assured the studios it would prevent a recurrence. But although those keywords can be blocked, there will be others. Even the company that a decade earlier aroused the same fears Google now did, Microsoft, publicly accused Google of a “cavalier” approach to copyright, charging that Google was making “money solely on the backs of other people’s content.”
Undeterred, Google vowed to take the case all the way to the Supreme Court. Because Google was already warring in the courts with publishers and the Authors Guild, this battle with Viacom opened a second front in the war with old media. And soon there would be other skirmishes, including those with new media companies like Facebook, the fastest growing social network. With more than forty million active users in the summer of 2007, Facebook “doubles in size every six months,” said founder Mark Zuckerberg. Then twenty-two, Zuckerberg is a Harvard dropout who in the early days of his company’s life slept on a mattress on the floor of a Palo Alto apartment he rented near his office, allowing him to move effortlessly between work and sleep. His baby face is framed with curly hair, and because he is thin, with a relatively long torso, one is surprised that he stands only five feet eight inches tall.
He arrived for dinner at an outdoor Thai restaurant in Palo Alto sock-less, wearing Adidas sandals and a green T-shirt, and ordered lemonade that he sipped through a straw. He was on guard to avoid saying anything boastful about Facebook, or intemperate about rivals. He said he did not feel competent to discuss almost anything but Facebook. He lacked Brin’s unguarded zest or Page’s quiet confidence. But his long pauses when asked about Google, and the way he shifted uncomfortably in his chair, suggest the tension between the two companies. He was somewhat less circumspect about MySpace, his main competitor among social networking sites: “What they’re doing is very much different from us. On a fundamental level, what they’re doing is not mapping out real connections. They’re helping people meet new people. Rather than using the social graph and the connections people have in order to facilitate decentralized communication, they’re using it as a platform to pump and push media out to people. They call themselves a next-generation media company. We don’t even think we’re a media company. We’re a technology company.”