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.”
