Why did Google launch its cloud service without licences?

September 2011


I’ve been sitting on a story from BusinessWeek from two months ago when the magazine reported that Google offered the major record labels $100 million to obtain licenses for its new cloud music service, but that talks broke down and one of the reasons was that the labels wanted Google to be more proactive in the fight against digital piracy. Google then launched a cloud locker service – without licences – and the legality of that has yet to be tested in the US courts. It is also interesting that Google filed a Amici curiae brief back in January in support of the defendant in the main case looking at this issue, EMI v MP3Tunes. MP3tunes operates a digital cloud “locker” service and is being sued by the major labels (see details of the decision in the New York District Court below)

CNET asks why the labels would pass up big dollars for antipiracy considerations. Whether the story is true or not,  it is clear that the large entertainment companies are trying to pressure Google to make changes – and the news of the new scheme brokered in the USA with the major ISPs means that this story makes more sense now. There they have forced the ISPS to take some responsibility for their users illegal activities – and moved the ISPs away from their preferred status of ‘dumb pipes’ and therefor not responsible for what their users get up too. As the top Internet search engine, Google is believed to be in a position to make it more to difficult to find pirated materials online, for example the company’s ads are often found on sites accused of trafficking in pirated or counterfeited materials. To be fair, Google has already agreed to a series of changes, and those include booting alleged copyright violators off AdSense, and blocking terms associated with piracy from appearing in the search engine’s Autocomplete function, but maybe the record labels and other content providers recent success with ISPs in the USA mean that they are now prepared to take a tougher line when it comes to Google’s current stance.

It may also explain why Universal Music (UMG), one of the four ‘major’ record labels, has continued to pursue a legal case against video sharing website Veoh in a suit that UMG brought in 2007, despite the fact that Veoh no longer operates. In the action, UMG argue that Veoh didn’t do enough to stop users from sharing videos that contained copyrighted music. Veoh responded in court, saying that it did everything required to be protected by the “safe harbor” from copyright lawsuits granted by Congress in the Digital Millennium Copyright Act.  Veoh essentially went out of business in 2009 and Veoh founder Dmitry Shapiro cited the costs of this litigation as one of the reasons the company went under. Investment group Qlipso who brought the assets but, has made it clear they aren’t in charge of this litigation.  In 2009 a Los Angeles federal judge overseeing the case ruled in Veoh’s favor which led to UMG is arguing its case at the U.S. Court of Appeals for the 9th Circuit, which covers most of the western U.S. and the issue is really what a company has to do to get the protections of the “safe harbor.” The Viacom v. YouTube appeal, which will be argued sometime later this year in the 2nd Circuit, will be the second appellate decision on the same issue.

In the Veoh case it has been suggested that UMG is actually arguing that the “safe harbor” in U.S. law only applies to backbone internet businesses—like Verizon or Comcast – and UMG’s lawyers are arguing that the law actually doesn’t protect websites – or search engines like Google –  at all. Well, it is very hard to argue that Google is just a “ dumb pipe” which must give at least some credibility to UMG’s arguments. But whether the court will go as far as UMG want is food for thought.

Read more: http://news.cnet.com/8301-31001_3-20066799-261.html#ixzz1NdejMtcs and see  US content industry and ISPs agree to be alert  in Music Law Updates, August 2011 and seehttp://the1709blog.blogspot.com/2011/01/cloud-is-future-google-joins-eff-in.html

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