Google disclosed that it has reserved $187 million from the $1.6b purchase price of YouTube.  The funds are being set aside for potential obligations that may arise as a result of liabilities.

This War Chest will obviously attract the attention of copyright owners hoping to regain losses from the exploitation of their intellectual property.  However, just because the money has been reserved does not mean that this is going to be easy picking fruit for greedy lawyers.

The truth is that this is not only the bounty but the defense as well.  In any potential conflict Google will have to weigh the merits and cost benefits of using the fund to fight off lawsuits versus potentially paying settlements with the funds.  Any legal attack against Google is going to need either a big war chest of their own, or they will need a successful prior suit against Google to succeed.

As yet, no one is ponying up to engage in a shoot out yet.

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The Wall Street Journal ran a nonchalant 6 sentence article(B5) about copyright claims filed against the Google Video Service today on 11-9-06.  The Claims were disclosed by Google in its recent quarterly report filed the day before.

Certain entities have also filed copyright claims against us, alleging that features of certain of our products, including Google Web Search, Google News, Google Video, Google Image Search, and Google Book Search, infringe their rights. In addition, our planned acquisition of YouTube may also subject us to additional copyright claims upon the closing of the transaction. Adverse results in these lawsuits may include awards of damages and may also result in, or even compel, a change in our business practices, which could result in a loss of revenue for us or otherwise harm our business.

Google not being a company about disclosing any more than necessary remained true to their tactics and did not reveal the source of the claims.

Speculation

This raises the specter that the YouTube purchase will be a large target for additional claims.  Google is no stranger to copyright claims and has fought them on almost every major service they have offered from Web Search to Google news to books and images.

Additional story were some what delayed(showed up several hours after the WSJ hit the streets) in catching on but they did catch on and speculation has questioned whether Google has established a ‘$500 million YouTube defense fund‘ which was promptly rejected by Google’s Chief Executive.

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Microsoft is working hard to catch up with Google. We have to wonder if they will be able to succeed. After all, Microsoft has a terrible track record of throwing money at a problem in an attempt to grab the number 1 or number 2 position. Everyone has witnessed how poorly Microsoft’s efforts paid off when they attempted to bump IBM’s OS2 and Apple’s OS out of the market, not to mention poor showings in forays with Netscape navigator, and Real Player. Microsoft obviously tanked in all those matchups. . . .Well actually they didn’t, they took market leads in all areas. They have been much less successful with web design tools as Frontpage has faired miserably against Dreamweaver, but MS has a solution to that as well with Microsoft Expression, which is even offered Free through the end of the year!

Currently Microsoft is number 3 for ad revenues behind Google and Yahoo!. They would like to catch up in advertising and in search. They are hoping to leverage their presence in mobile phones, gaming systems, and Digital television to help take share by creating a bigger market. Google may hold a lead in web browsing alone, but expand that out to advertising in gaming consoles and Microsoft has an obvious advantage with Xbox 360 (Oh and they are trying to beat Sony and Nintendo in that market too.)

Microsoft is often lauded as being slow to develop and poor at creating great new applications, however they are great at playing catch up! They are also very good at waging a multi-front assault on many different competitors at one time.

Microsoft is rapidly turning itself into the General Electric of Software and Internet technology, building out many very broad and increasingly very deep markets.

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Check out the article by ZDNet regarding Google’s move into Digital Video Recorders (DVR) and DVR communities and advertising opportunities.

Google seeks employees for TV service by ZDNet’s Garett Rogers — As the Radioactive Yak reports, Google has started accepting resume’s for an Interactive TV Product Manager in the Mountain View and software engineers experienced in “emerging TV standards” at the Mountain View and London locations.Google owns some domain names that seem to back up this speculation: googledvr.net and googledvr.org. They currently do not own the [...]

Impact Assessment:

Picture a DVR environment where you can truly find anything your are looking at any time day or night 365 days per year. If we were to speculate on the current major players in the market from set top box manufacturer’s, to the Cable Industry, to specialists like TiVo, we run into a common shortcomming.

No one has yet found a way to make it easy for consumer to get access to everything, through a remote control, easily and quickly.

Google has established itself based on the concept that you can ‘google’ the internet and find anything through a Google search enginge. They are working to expand into new areas from books, to video, music, pictures and more.

It would be a natural fit for google to build out a better infrastructure for current devices to work with. Which hardware manufacturer will line up first to have the “Powered by Google” logo branded all over their device and packaging?

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Its interesting to note that Google one of the newest major corporations reshaping the world of advertising has reeled in Verizon Communications to resell Google AdWords at a local level.

Small Business used to purchasing ads in Verizon’s Superpages (yellow pages) will now be coached by Verizon agents on how to place their ads with keywords in Google’s AdWords.

AdWords is a service provided by Google where advertisers bid online to place their advertisment according to the keywords or page viewers most likely to be associated with the ad. They compete for placement according to others bidding on the same keywords or online viewers. Highest bidder gets the ad.

Its not mentioned specifically, but the article hints that these local placements will be geographically restricted somehow.

Verizon online directory in ad deal with Google - Yahoo! News:
“‘We’re pleased Verizon is an authorized AdWords reseller and helping local small businesses take advantage of the opportunities of search advertising,’ Google said in a statement.’”

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