Google's (Nasdaq: GOOG) latest move has to leave some observers scratching their heads.
The search titan announced yesterday that it will take steps to reduce the prominence of pirated material in its searches, adjusting its algorithm to lower the ranking of sites that receive complaints for violating copyrights.
The move was applauded in Hollywood, which had been pushing for such a decision for years. The two parties had most recently gone to battle over the SOPA and PIPA laws, which threatened to fine sites that host pirated material. But the logical question for Google has to be, "What took so long?" or "Why now?" The search engine has long been accused of being a sort of online trespassing guide, undermining the viability of different media businesses. In 2009, Congress grilled former executive Marissa Mayer about the company's role in hastening the demise of newspapers by directing users to free aggregated content.
But it also bears remembering that Google owns YouTube, perhaps the most prominent of all pirated-material sites. While its original intent may have been a simple way for Internet users to post homemade videos, YouTube is also a popular way for people to view protected content such as music videos, movies, and TV shows for free. Music videos in particular are extremely popular, with some gaining 100 million views or more. While YouTube is screened through the same filters as similar sites, analysts don't expect it to be greatly affected by the new policy because of its size and its cache of legal videos. It seems that the move could simply serve to promote YouTube at the expense competitors.
This is also not the first time the search king has been accused of muzzling competitor content to promote its own.
Yelp (NYSE: YELP) and Expedia (Nasdaq: EXPE) were among a group of companies in a Congressional hearing last fall accusing Google of abusing its monopolistic position in search, as both sites said Google favors its competing products over similar services and threatened to block Yelp from its searches.
Google also dipped its foot deeper into the monopolistic mire with its proposed acquisition of Frommer's, which build on a travel-services arsenal that already includes an earlier acquisition of Zagat.
And it comes less than a week after the Federal Trade Commission fined Google $22.5 million to settle allegations that it broke privacy protections on Apple's (Nasdaq: AAPL) Safari browser.
With the increasing scrutiny Google has come under for its many acquisitions and its attempts to push further into content, investors may need to question whether this strategy is ultimately tenable. The tech giant faces antitrust allegations in the U.S., the EU, and now India, and it seems its legal troubles will only grow in the years to come.
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