Mac Greer: You recently wrote a piece entitled Googlesoft, a piece where you say that Google is facing some legal and political challenges reminiscent of Microsoft
David Vise: Well you know, Microsoft got into trouble in the 1990s because it was accused of being a bully, and a number of companies ultimately went to Washington and got the politicians and the Justice Department interested in looking at Microsoft's monopolistic practices, and it led to a huge political problem for Microsoft that ultimately resulted in the antitrust case.
Google has a similar problem, only instead of a monopoly situation, Google's problem is copyright. You have a half-dozen major media companies accusing Google of profiting from pirated music, pirated video, pirated books -- [you] mostly hear of books and movies, which they say is copyright protected, and where Google is giving aid and comfort to the enemy, so to speak, those who are using copyrighted materials without paying for it. You look at the stable of media companies that are opposing Google on this, and it is virtually every major media company out there. One thing they all seem to agree on is that they feel threatened by Google.
The key here is that Google does face heightened political risk, because it is a disruptive technology, in this case, and it is not just in the U.S. A Belgian court ruled against Google for using information from newspapers in Europe without getting prior approval. This goes beyond these major media companies to other disruptive technologies employed by Google that have displaced industries completely. The advertising industry right now feels very threatened by Google, because Google wants to be a player not only with online ads, but also with radio ads, video ads, and more.
Here is a small example of another disruptive technology that has created a minor uproar recently. Google rolled something out that was very good for the general public and the consumer, arguably. And that is Google rolled out a way to search for patents. Every patent that has ever been granted, you can search for on Google easily and quickly. But there is an entire industry of people out there who used to make their living doing patent searches. And suddenly Google's patent search has replaced them completely and totally.
Mac Greer: And David, MySpace recently introduced technology that will block pirated video clips from showing up on the MySpace website. Now, in the past, Google's YouTube has put the burden more on media companies, who must make a request to have any unauthorized content removed. How do you think MySpace's new filtering technology will affect Google's YouTube?
David Vise: Well, I think the issue with Google and YouTube is a very serious one. I think it goes to the heart of the copyright issue and to its problems. You have YouTube, the most popular online video site, with literally thousands and thousands of television shows, motion pictures, and other things that it has no right to be distributing, and Google profits from through advertising or through brand awareness. Viacom recently, unable to reach an agreement with YouTube and Google over payment for the use of its material from [Comedy Central] and other things, asked YouTube to remove 100,000 videos.
Mac Greer: And this is the second time that Viacom has asked Google or YouTube, in this case, to remove that material, right? So they have had a real on again-off again relationship.
David Vise: Google appears to have paid lip service; YouTube appears to have paid lip service to using a technology to filter out content that shouldn't be uploaded, that is copyrighted and all the rest, but they don't seem in a big hurry to do this. Google seems much more aggressive when it comes to organizing all the world's information and making it universally accessible.
Google seems to prefer to beg forgiveness after the fact rather than to beg for permission upfront. Your earlier point is right on the mark. Google puts the burden on publishers of books, Google puts the burden on owners of the rights to video, to specifically request item-by-item what it is they want removed, rather than seeking permission to use it.
I think this is going to become a growing problem. All the major book publishers have filed a lawsuit or joined a lawsuit through a trade association against Google over its digitization of millions of library books that are in collections at Harvard and Stanford, University of Michigan, New York Public Library, Oxford, and the entire University of California system. Google is digitizing these books and the book publishers say what Google is doing by making a digitized copy of these books is a violation of copyright. Google says it is not, and that it is protected. This is the kind of thing that can lead to, again, the creation of enormously powerful enemies. Google is disrupting the status quo, and while the legal case makes it way through the courts, the political opposition to Google mounts.
Google recently flexed its muscles as well down in North Carolina. The company came in with a notion of looking for a location to build a data warehouse in the state, and Google asked a variety of public officials, including elected legislators, to sign non-disclosure agreements, so that when they were actually voting on tens of millions of dollars in tax breaks to attract Google to North Carolina, they couldn't even mention the name of the company on the floor of the legislature in the state. After that little episode ended, a number of people used the word for Google that used to be reserved for Microsoft, and that word was "bully".
Is Google in trouble?
Mac Greer: You say that Google still has time to fix the problem, though.
David Vise: I believe Google still has time to fix the problem; the question is whether Google has the will. What we have seen so far is Google [saying] that its corporate motto is "Don't be evil", but if you watch what Google does rather than listening to what it says, you see that Google is truer to its mission statement, which is, "Organize all the world's information and make it universally accessible." It seems to trample on what other people regard as legitimate copyrights and licenses and other things. Google says it respects those things, but in practice, it doesn't seem on Google, on YouTube, and other sites, that it lives up to what it is saying.
Mac Greer: So to what extent do you think Google is losing control of its image?
David Vise: I think the honeymoon period is over. Google, for consumers, remains extraordinarily popular globally. I don't think it has lost any kind of ground with users of the service as a result of this, but I believe that one of the two or three greatest potential risks to the future of Google is a sullied image, and political risk, and really, backlash from legislators and competitors and politicians, unless Google takes a more forthright stance on copyright.
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Mac Greer does not own any shares of the stocks discussed. When it comes to search, Mac loves Google, but still has a small Webcrawler-shaped place in his heart. The Motley Fool has a disclosure policy.