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Er…Not to Split Hairs But…

By - November 19, 2006

Youtube-2From the AP:

Google Inc. has set aside more than $200 million in its just-completed takeover of YouTube Inc. to cover possible losses on the deal, creating a financial cushion that might protect the Internet search leader it it’s hit with legal bills for the frequent copyright violations on YouTube’s video-sharing site.

Without elaborating in a late Monday statement, Google said it is withholding 12.5 percent of the stock owed to YouTube for one year ‘to secure certain indemnification obligations.’

Prior:

I asked about the YouTube acquisition and whether a portion of the $1.65 billion sum was reserved to pay settlements with various media companies, as Mark Cuban asserted on his site. Eric flatly denied it.

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8 thoughts on “Er…Not to Split Hairs But…

  1. JG says:

    In my own dealings with Google over issues surrounding all things copyright, I’ve observed a certain schizophrenia in the way they go about things. I don’t understand it, I won’t pretend to understand it, and I don’t even have an attempt at a plausible explanation for it. No, John, you’re not splitting hairs; this is a pattern that they like to follow. My question, however, is why? What does Google possibly stand to gain by telling you one thing one day, when the true facts are certain to come out a few days later? What explains this sort of behavior? It has bugged me for years. What is it about their culture that makes them operate like this? To keep schmucks like me constantly guessing?

  2. Dorrian says:

    The acquisition agreement is there for the world to read, and this issue seems to hinge on the definition of “Indemnified Copyright Action”, which resides on the undisclosed disclosure schedule. The definition is likely a list of media companies on that schedule that I’m sure Chad and Co tried to make as long as possible – so long that Eric was straightforward in his answer to you.

  3. Dorrian says:

    sorry … the definition is likely a list of excluded media companies…

  4. Marc says:

    that *is* splitting hairs! I think technically Eric’s answer may have been right as the money is not set aside to pay copyright holders, but rather, the money is set aside to NOT pay to YouTube Inc. shareholders if the YouTube division of Google DOES have to pay.

    but it is certainly disingenuous for Eric to have misled you on stage!

    i guess it depends on what your definition of “is” is! :)

  5. Dave White says:

    When purchasing YouTube, Google was aware of the copyright issues that it would face. It seems that Google team was well prepared for this right from the word go.

  6. Erik says:

    This 12.5% escrow provision is standard in the Valley and elsewhere when private (and often public) companies are bought. So while I’m not a Google fan or an Eric fan, I don’t think he was being misleading here. I’m sure they’ve had a similar provision for most of their acquisitions, of course tailored to the business of the target company. The % changes, sometimes 5%, sometimes 20% and is part of the negotiation but is almost always there to protect the buyer from potential lawsuits or certain other things that may happen in the future but were caused by actions of the target company before the acquisition closed. And as Marc noted earlier, it’s withheld from shareholders and only paid out later if nothing bad happens, so doesn’t really affect Google either way.

  7. Patrick Dempsey says:

    If memory serves, the original Cuban figure was $500 million, and the question was posed to him referring that number so the first answer was true.

    Well, in a Bush admin sort of definition of “true”.

    And didn’t you get enough good quotes from Eric for the book? I think you should let him throw you a bum steer every once and awhile.

  8. This “copyright infringement” war against YouTube is so freaking tiresome. I wish the old dinosaur companies attacking YouTube/Google would just lie down and die already.

    Behold: the Universal Content Utopia is coming and the jerkbags cannot stop it. Any Content. Any Time. Any Place. Any Format. Any Amount. Any Frequency.

    What annoys me and makes me also laugh is how the “copyright material” is Promoting the artists, tv shows, films, music, news program, as NBC rightly figured out.

    Talk about marketing suicide! Dumb fools.