Week in review: Deal or no deal in YouTube?

Google buys video-sharing service and adds to the Office 2.0 wave. Chipmakers talk speed, while Toyota touts ethanol.

Picked up for a cool $1.65 billion by Google, YouTube could turn out to be a windfall or a legal money pit for the search company.

With the acquisition of YouTube, which allows people to upload video clips and share them with the world, Google may well have its Internet search competitors in a jam. As more people have subscribed to broadband connections and as video-sharing technology has improved, traffic to YouTube's site has been skyrocketing.

Responding to the combination is going to be tough for Google competitors like Microsoft and Yahoo. Should they build on the video services they already have? Should they make their own Internet acquisitions and deals? There's no easy answer.

Analysts say Google's next steps will be crucial for it to avoid the potential legal pitfalls of YouTube, while making the video-sharing site more profitable and searchable.

YouTube users aren't shy about posting other people's copyrighted material, and the company has tried to adhere to federal law by jettisoning such clips when notified. Google may find that its bulging bank account makes an alluring target for a new wave of copyright lawsuits.

For their part, executives involved in the deal are downplaying concerns over litigation. Chad Hurley, CEO of YouTube, said: "We've always respected rights-holders' rights. What this deal allows us to do is focus on that much more than we ever could before and build the system so copyright holders can benefit."

But YouTube's--and therefore Google's--potential legal liability depends on how the courts interpret an area of copyright law that remains surprisingly unsettled. In addition, the U.S. Supreme Court's decision in the Grokster file-sharing lawsuit has raised more questions about who's liable and who's not.

"I think it's pretty murky," said Jessica Litman, who teaches copyright law at the University of Michigan. "There hasn't been much litigation on the scope of (copyright law's) safe harbor."

Office 2.0
Video-sharing is not the only place Google has been exerting its heft this week.

The company launched a beta version of Google Docs & Spreadsheets on Wednesday, diving further into Web-based productivity applications. The free program enables people to create, manage and share documents and spreadsheets online in real time, use a variety of file formats for importing and exporting, and publish documents and spreadsheets on a Web page or blog.

Starting with e-mail, Google has been launching Web-based services and software in a move seen by many as encroaching on Microsoft's turf. Microsoft has responded by revamping its business to focus on Web services under the Windows Live and Office Live monikers.

Still, attempts to unseat Microsoft Office look more likely to come from an army of ants than from one giant foe.

Several start-ups are developing online services that handle tasks people typically carry out with desktop applications like those in the popular productivity suite. At the Office 2.0 Conference, which began in San Francisco on Wednesday, many of those companies showcased their latest crop of products for tasks typically done with desktop applications such as Microsoft Office.

Rather than trying to replicate the features of Office online, many of these companies are focusing on the value of their services' Web 2.0 collaboration.

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