Google Stashes $200 Mln for YouTube Suits

November 16, 2006 By Geoff Duncan

Google has completed its surprise $1.65 billion acquisition of online video site YouTube - and set aside over $200 million as a hedge against copyright infringement lawsuits.

Internet giant Google has completed its $1.65 billion acquisition of online video site YouTube—and in the process, has reportedly decided to set side more than $200 million to cover losses and damages stemming from copyright infringement lawsuits brought against the video sites.

The money comes in the form of 12.5 percent of the equity from Google’s issuance of 3.66 million shares of stock to cover the YouTube purchase: in other words, Google paid for YouTube by offering Google stock to the market, and it’s now setting aside one eighth of that money to, according to Google, “secure certain indemnification obligations.” The money will remain in escrow for one year; presumably, if Google doesn’t face any major lawsuits stemming from its acquisition of Google, the money (or what remains of it) will be turned over to YouTube owners and founders Chad Hurley and Steve Chen.

Google’s acquisition of YouTube was seen by many as hanging a very large “Sue me now” sign around the Internet titan’s virtual neck; YouTube is famous for offering video content uploaded by its users in violation of copyright. Both Google and YouTube have announced content identification and copyright protection technology which is designed to prevent uploading of copyrighted material, as well as agreement with some rights holders to enable users to use selected content in user-generated videos and other mashups. YouTube has also signed revenue-sharing deals with major media outlets—perhaps making those publishers less likely to sue a “partner.”

Showing 4 comments

shehu j salisu at 10:13am 16th March 2007 It is a milestone in the annal of history. Thanks for making my research possible, always. Wishing you the very best. Suggestion! Remain adding my mother language (Hausa) in your language selection. Once more Thanks. shehu (Nigeria)
Matt at 5:10pm 21st November 2006 Yep, the money went fast, but now it's going up fast with Google closing today at like 509.00 per share. Wowza.
Ian Bell and Dan Gaul at 12:15am 19th November 2006 What's interesting is that it sounds like Chad and Hurley really were not able to get $1.6 billion, but instead had to agree to set aside a certain portion for lawsuits. So out of the $1.6B they sold their company for, the VC firm (which owned 30%) waliked away will a tad over $500MM, over $200MM was set aside for suits. That leaves about $900MM left for the 60 something employees and the founders. Boy does that money go fast or what?
Jake in LA at 9:31pm 16th November 2006 So..what your saying is that they not only expect to be fighting off copyright claims against them, but they plan on losing, and then had the foresight to plan ahead and put money aside for that purpose.
Wow, bring on the lawsuits boys! Google's got their checkbooks out and are ready to pay! They know YouTube is guilty, so go get yours!