Viacom Tried to Buy YouTube Before Google Snatched it Away

Viacom (VIA), the media giant suing YouTube for $1 billion, tried to buy the booming video site until the very last moment before Google (GOOG) snatched it for $1.65 billion in 2006, according to newly released court documents.

During the lengthy discovery process, each side was able to subpoena the other's emails, producing some eyebrow-raising disclosures. Bottom line: Both filings succeed in making the other company look bad -- but neither side appears poised for a legal slam-dunk.

As copyright expert Eric Goldman and others have noted, the dueling briefs amount to a Tale of Two YouTubes, with Viacom focusing on the site's early days, when it was awash in illegal content, and Google emphasizing recent history, when the site has strictly complied with the Digital Millennium Copyright Act (DMCA), which even Viacom acknowledges. In fact, Viacom is asking only for a summary judgment "for the period prior to May 2008."

Viacom charges that YouTube's owners "intentionally" encouraged users to upload copyrighted material in a "get-rich-quick scheme through piracy." Google's counterargument is that it's protected by the DCMA's "safe harbor" provisions, which protect Internet services if they promptly remove copyrighted content.

Google also wants the judge to weigh heavily Viacom's own promotional use of YouTube to push its TV shows, as well as Viacom's apparently intense interest in actually buying YouTube before Google did. The search giant argues that Viacom's frequent use of the site as an advertising tool -- and attempts to buy the site -- undermines its case.

A Joint Venture With Google?

Even as YouTube's founders "grappled" to address the illegal content driving the site's explosive growth, it was already clear to Viacom executives how much potential YouTube held. Up until the very last moment Google bought YouTube in October 2006, Viacom was itself trying to acquire the video start-up, or even enter into a joint-partnership with Google, as passages cited by the Associated Press show.

"The idea would be: Viacom and Google buy YouTube," Adam Cahan, an MTV Networks executive who left Google earlier in 2006, wrote in an email to Susan Wojcicki, a top Google exec and sister-in-law of Google co-founder Sergey Brin. Google and YouTube said no deal.

In its filing, Google essentially calls Viacom a hypocrite for turning its legal cannons on a website it once repeatedly tried to acquire. "While plaintiffs allege in their legal filings that YouTube is some kind of 'pirate' site, behind the scenes Viacom thought so highly of YouTube that it tried, unsuccessfully, to buy it," Google wrote.

Google makes a number of arguments in its filing that make Viacom look bad. But the emails that Viacom has produced of YouTube's founders acknowledging illegal content and its potential to drive growth look bad as well. The fact that co-founder Chad Hurley claims he "lost" all his emails from 2005 to 2006 and "developed serial amnesia" when confronted by other missives doesn't help either.

Given that Viacom is asking for summary judgment on pre-May 2008 activity only, the judge may very well rule in its favor and award an amount less than the $1 billion. With so much at stake in terms of DMCA precedent here, Google may decide to settle this case. As copyright expert Goldman wrote last week: "The parties are both losers for not finding a way to settle this case."