Stephanie Bodoni – “Google Faces More Privacy Woes After YouTube Ruling”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPutne75S5DU&refer=home

Google Faces More Privacy Woes After YouTube Ruling

Stephanie Bodoni | July 4, 2008

Google Inc., owner of the YouTube video-sharing Web site, may be exposed to heightened privacy complaints from Internet users after a U.S. judge ordered it to give Viacom Inc. a database about online viewers.

Google was ordered two days ago to turn over records of videos viewed on YouTube, the login name of viewers and their computer’s Internet address. Google already faces scrutiny over its storage of user data in the U.S. and Europe.

“The chickens have come home to roost for Google,” said Simon Davies, director of Privacy International in London. “If they were going to unnecessarily keep this information, there was always the chance someone was going to grab it.”

Viacom, owner of Comedy Central and MTV television networks, wants the information to find out if YouTube viewers watch copyrighted shows in an effort to bolster its $1 billion infringement lawsuit against Google. The ruling may lead some Web surfers to avoid using Google, which makes money based on traffic to and from its Web sites.

Google, owner of the most-used Internet search engine, has resisted attempts to get at its troves of user data. In 2006, the company fought a U.S. subpoena for months as it sought to assure users that their search records weren’t easily accessible. Google founder Sergey Brin said it’s the Mountain View, California-based company’s “obligation” to protect users’ privacy.

Copyright Favor

“We will ask Viacom to respect users’ privacy and allow us to anonymize the logs before producing them under the court’s order,” Catherine Lacavera, Google’s senior litigation counsel, said in a statement yesterday.

Viacom “has not asked for and will not be obtaining any personally identifiable information,” the New York-based company said in an e-mailed statement. Any information obtained “will be used exclusively for the purpose of proving our case against YouTube and Google.”

Judge Louis Stanton’s ruling may signal the start of a willingness to favor copyright holders over privacy proponents, following years of court decisions making it more difficult to get that kind of information, said William Heller, an intellectual property lawyer at McCarter & English LLP in Newark, New Jersey.

“This could represent a shift in what courts are willing to do,” said Heller in a telephone interview.

The decision may trigger further privacy-related problems for Google in Europe, analysts and lawyers said.

European Concerns

Privacy International will complain to data-protection officials from the 27 European Union nations by July 7, according to Davies.

The EU’s so-called Article 29 Data Protection Working Party in April concluded after a one-year probe into how search engines store user information that companies such as Google, Microsoft Corp. and Yahoo! Inc. must cut the time they keep the data to comply with EU privacy laws.

The group had earlier told Google it may be violating EU privacy laws by preserving user data for as long as two years, spurring Google to trim the storage period to 18 months. Microsoft and Yahoo followed shortly after.

“If that database includes information on European YouTube users — and it seems it includes worldwide users — the data protection authorities in Europe would certainly not approve,” said Quentin Archer, a lawyer with Lovells LLP in London.

Google has yet to turn a profit on the $1.65 billion it paid in 2006 to buy YouTube, more than 100 times the video- sharing Web site’s annual revenue. Google shares rose 1.9 percent to $537 yesterday. The stock has lost 22 percent so far this year.

Worldwide Users

“Google is in a tough spot, they must comply with the court order but there’s a lot at stake in doing so,” said Greg Sterling, an analyst at Sterling Market Intelligence in San Francisco. “If Google fights for its users’ privacy it could be seen as a champion of privacy.”

Archer said the U.S. doesn’t have any general rights of privacy, such as in Europe.

“Google faces potential fines, private damages claims and, most importantly, reputational harm if users’ personal data are shared with Viacom in violation of EU data privacy rules,” said Wim Nauwelaerts, a lawyer in the Brussels office of Hogan & Hartson LLP. “The mere fact that a U.S. court has ordered the transfer would not provide an adequate legal basis for disclosing European users’ personal data.”

Ensuring the data was anonymous, as Google has asked, may remove some privacy concerns, said Nauwelaerts.

`Deals Are Off’

Davies, the director of Privacy International, said the case could affect all Internet companies that operate globally.

“The whole transfer of personal data from the EU to the U.S. is predicated that there is some level of European style protection,” said Davies. “If we can’t trust U.S. courts to protect that and if we can’t trust Google to be honest and transparent, all deals are off.”

The case is Viacom International Inc. v. YouTube Inc., 07-cv-02103, U.S. District Court, Southern District of New York (Manhattan).