Google’s Flub = Startup Opportunity

Every now and then, Google does something to remind us all that despite its awesome market cap, in many ways it’s still a company learning the ropes of the new businesses its search success drags it into.

The latest such gaffe, of course, is its slow and ineffective response to illegal video uploads on its YouTube property, where Google has been skooled by the big media companies in an impressive PR assault. The good news? Google’s flub could mean opportunity for startups who could help Google improve its anti-piracy efforts more quickly than a home-baked solution.

While Viacom’s request to pull 100,000 videos was a loud first shot across the bow, the real culmination of the big-media attack on Google surfaced Wednesday morning, in the form of a long Wall Street Journal story about the rising resentment between big media and Google over YouTube and illegal videos.

With the story’s main sources and intimate details of failed negotiations coming mainly from the big media side, Google never had a chance except to look bad — especially with the killer last quote from Google CEO Eric Schmidt claiming he was “not in a great hurry on this issue.”

Well if he wasn’t then, he is now. Before the spin could get any worse, Schmidt waved a bit of a white flag Wednesday night, telling Reuters in an interview that offering anti-piracy technologies to stop unauthorized video sharing is now “one of the company’s highest priorities.”

While even the Journal article admits that “the current strife might eventually prove to be no more than hard-nosed negotiating,” its conclusion that “Google’s attempt to cut deals with media companies seems to be turning into a long slog” is also spot-on, and reminds us not a little bit of Google’s amateurish forays into lobbying Capitol Hill last year during the net neutrality battles.

In that instance, Sergey Brin’s visit to Congressional offices in casual-Friday attire was a visual clue that Google was out of its comfort zone. In the current YouTube fracas, the first red flag went up for us when, during the company’s most-recent earnings call, Schmidt talked openly about how content providers should just send copyrighted works to Google, and figure out the partnership deals later.

That sort of negotiating might fly among startups in Silicon Valley, but in New York and Hollywood those are fighting words, the kind that cause men like Sumner Redstone to pick up a bat and start swinging (or worse yet, to start cutting deals with potential competitors).

In the end, we still expect this one to get solved by money and lawyers — though the pressure brought on Google by the big-media PR blitz may end up costing the search giant another acquisition or two if it decides to buy and not build better anti-piracy technology in order to get YouTube’s house in order more quickly. It might be all good, since Google could pick up some more big brains in the process, and Valley VCs might get to enjoy another equity event.

And the rest of us can then catch up on our Letterman Top Ten lists and Daily Show sketches at work once more, without the feared “this video has been removed” warnings.