Did Google violate its 'do no evil' pledge?

Filed in archive IPTV on October 31, 2006

No, because Google believes that impoverishing artists and stifling competition is a good thing

On Mark Cuban's blog last night he re-posted an anonymous post that hints at intimate details of the Google-YouTube deal that haven't published. The following is my summarization of that piece. Even if it can't be substantiated, it is an interesting theory, most of which I suspect is true.

Did Google violate its 'do no evil' pledge?

Google realized that $500 hundred million may not be enough, so they decided to let certain media companies in on the sale. Once major labels got wind, they used the "most favored nation" clause to ensure their piece of the action--about $50 million per major media company from the Google buyout. I reported on this part of the story.

But here is where the plot sickens thickens. The media companies had a problem: if they received cash, they would be forced to pay out royalties to artists (some contracts upwards to 50%).

The solution? Pay out the $50 Million bribes payments in YouTube stock. This means the record companies won't have to pay their artists any royalty fees because it's an 'investment', and artists don't partake in that.

But Google had a problem too: how to maintain YouTube's site traffic and keep the media companies from pulling the videos that everyone goes to the site for. You could say that the media companies were motivated because they had 50 million reasons each to help Google out.

The solution? First, was "an agreement to look the other way for the next 6 months while copyright infringement" continued at YouTube. Second, was to "pile some lawsuits on competitors to slow them down and lock in YouTube's position." And we did see that Universal obliged immediately, suing Bolt and Grouper the very next day.

If this story is true, Google basically bought a six-month 'get out of jail card' in regards to copyright infringement and strong-armed its competitors. Mark Cuban says he "respect[s] and trust[s] the person who wrote these details.

Permalink: Did Google violate its 'do no evil' pledge?

Tags: competition  corporate  buyout  acquision  strategies    google  google+violate 

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