Media conglomerate Viacom Inc. sued Google Inc. and its Internet video-sharing site YouTube for more than $1 billion on Tuesday in the biggest challenge yet to the Web search leader’s strategy to dominate the online video market.
The lawsuit accuses Google and its popular online video unit of “massive intentional copyright infringement,” threatening its ambitions to turn YouTube into a major distributor of entertainment and outlet for advertising.
Shares in Viacom gained 1.25 percent to $40.07 and Google shares slipped 1.25 percent to $449.07 in morning trading.
Sumner Redstone-controlled Viacom has been the most vocal critic of YouTube as it sought to negotiate payment for use of its media programming.
NBC Universal and News Corp. have also criticized YouTube’s copyright protection policies but stopped short of taking legal action.
YouTube does not prevent copyrighted content from being uploaded onto its site, but it will take material down if contacted by copyright owners.
“YouTube’s strategy has been to avoid taking proactive steps to curtail the infringement on its site, thus generating significant traffic and revenues for itself while shifting the entire burden — and high cost — of monitoring YouTube onto the victims of its infringement,” Viacom said in a statement.
Viacom filed the suit in the U.S. District Court for the Southern District of New York, seeking an injunction against further violations as well as damages.
Google said it was confident that YouTube respects the copyrights at issue in the Viacom case.
“We will certainly not let this suit become a distraction to the continuing growth and strong performance of YouTube,” Google said in a statement.
Viacom, home to the MTV and Comedy Central channels, contends that almost 160,000 unauthorized clips of its programming have been uploaded onto YouTube’s site and viewed more than 1.5 billion times.
The decision to sue Google followed “a great deal of unproductive negotiation,” the company said.
WEB VIDEO RACE
Google bought YouTube last November for $1.65 billion, aiming to capitalize on its explosive audience growth built from sharing both homemade and professionally produced videos.
The company said it would introduce technology to help media companies identify pirated videos uploaded by users, but has not given a firm timetable.
Viacom and peers like NBC Universal are also investing heavily in their own Internet video sites in an effort to benefit from the migration of television audiences to the Web.
“Viacom’s Web traffic is increasing nicely since it pulled content from ‘GooTube,”‘ said Richard Greenfield, analyst at Pali Capital.
“There is certainly an opportunity for YouTube to do a deal with Viacom, but Viacom does not have to have a YouTube deal,” Greenfield said.
Google’s dominance in Web search had already made it a magnet for lawsuits by copyright and trademark holders.
The Silicon Valley company faces outstanding lawsuits in the United States and Europe by major book, magazine and online news publishers as well as small-time Web site operators.
Google has prevailed in high-profile suits against it by auto insurer GEICO over trademark infringement and in a demand by the U.S. Justice Department that Google comply with a request for consumer Web search data.
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