Google Sets Aside $200M+ War Chest For YouTube Indemnification - InformationWeek

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Google Sets Aside $200M+ War Chest For YouTube Indemnification

The fund will likely be used to protect Google against YouTube copyright fights.

Google set aside more than $200 million to cover any losses or damages stemming from the acquisition of video-sharing site YouTube.

Google completed the $1.65 billion deal, which called for Google to issue more than 3.66 million shares of its prized stock, the company said Tuesday. But 12.5% of the equity will be placed in escrow for one year "to secure certain indemnification obligations," Google said in a statement.

Indemnification is used to protect against losses or damages. The amount set aside means less for YouTube owners and founders Chad Hurley and Steve Chen. Google didn't provide a reason for the indemnification, but it's likely related to YouTube's use of copyrighted video uploaded by registered users without permission. YouTube has a policy of removing content at the request of copyright holders, but the fact that protected material can be easily found on the site leaves it open to potential lawsuits, experts said.

To limit the possibility of a crippling suit, YouTube has also signed revenue-sharing deals with major media companies, and has promised to provide online tools that copyright holders can use to find unauthorized content and remove it.

The amount of stock placed in escrow amounts to about 457,000 shares worth $224 million, according to the newspaper Seattle Post-Intelligencer. The calculation was based on Google's $489.30 closing stock price on Tuesday.

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