Legal News

In Web Video Antitrust Probe, Google Finds Itself in Unusual Spot

By Ashby Jones

Given its rapid growth and dominant market share, it’s perhaps not entirely surprising to find Google from time to time on federal trustbusters’ radar screen.

What’s less common, however, is to find the Justice Department looking into allegations that Google is being hurt by allegedly anticompetitive behavior.

But indeed, that seems to be the case. The WSJ’s Thomas Catan on Friday is reporting that the Justice Department investigating whether a group representing some top technology firms is unfairly trying to smother a free rival technology for delivering online video backed by Google.

Currently, explains Catan, video-streaming services like Netflix and Google’s YouTube pay patent royalties, as do makers of Blu-ray disc players and other hardware, to an organization called MPEG LA, which is the target of the probe.

MPEG LA has amassed pools of patents covering widely used video formats and collects royalties for its members, which include Apple Inc. and Microsoft Corp.

Antitrust enforcers are investigating whether MPEG LA, or its members, are trying to cripple an alternative format called VP8 that Google released last year - by creating legal uncertainty over whether users might violate patents by employing that technology, these people added.

MPEG LA didn’t confirm or deny it is under investigation. But the group says it isn’t acting to kill a competitor. It said it’s simply offering a service for patent holders and is agnostic about which video format prevails.

MPEG LA, which was formed in the late 1990s, manages the licensing of more than 1,700 patents used in a high-definition video encoding standard known as H.264. The Justice Department is concerned the group’s actions may stifle competition to that dominant format, the people familiar with the matter said.

Google has been offering an alternative. The Silicon Valley giant last year paid $125 million to buy a company that developed the video-compression format called VP8. Google later released it as a royalty-free standard under an open license that enables software developers to use it any way they wish.

At present, no patent royalties are charged for using Google’s VP8 format. But MPEG LA has questioned that status, and last month issued a call for companies to submit patents they believe may be infringed by VP8. “I can tell you: VP8 is not patent-free,” Mr. Horn said. “It’s simply nonsense.”

The threat of future lawsuits has helped persuade some companies to forsake VP8. And it’s precisely that that’s stoked the interest of federal regulators, reports Catan.

Full post as published by Law Blog - WSJ.com on March 04, 2011 (boomark / email).