Google Versus Everybody Else

San Francisco: There is a fresh antitrust investigation involving Google now. Only this time, it is Google that is on the other side of the fence. The outcome of the enquiry may very well decide how we view online video in the future. According to a report in the WSJ, the US Justice Department has initiated an investigation on whether MPEG LA, a group representing a handful of top technology firms, is trying to throttle a rival technology backed by Google for delivering online videos.

How is MPEG LA involved in all this?

MPEG LA was formed in the late 1990s. It manages the licensing of a portfolio of patents used in consumer electronics, eCommerce, wireless technology, and education among other verticals. MPEG LA's current patent pools include MPEG-2, ATSC, AVC/H.264 and VC-1 among others. This includes digital video encoding, or put simply, how we display or view online video.

MPEG LA members include a list of high profile companies – Apple, Cisco, Dolby, Fujitsu, HP, Microsoft, LG, Hitachi, Samsung, Toshiba "the list goes on. These companies have similar or complementing patents, which MPEG LA groups together into patent pools. Instead of negotiating licensing agreements and usage terms with a whole bunch of companies, MPEG LA enables users to acquire patent rights from several companies as part of a single transaction. Licensees pay money to MPEG LA, it collects fees on behalf its members, then splits up the royalty/licensing fees and such among the members of that particular pool according to pre-agreed terms.

MPEG LA's current pool includes a standard used in set-top boxes, media players, software, and mobile devices, among other things. There are currently some 966 licensees of this standard called AVC/H.264. Licensees includes among others, companies like 3M, Adobe, Dolby, Facebook, Microsoft, and Google.

What seems to be the problem?

Last year, Google released a video compression format called VP8, under a Creative Common License, which makes it free. Developers can use this standard without having to worry about licensing fees and royalty payments. This is a smart move for Google. Sure, it is not collecting money from the technology, but by pushing a free-to-use technology, it is hoping to own the de facto standard for online video. Business strategy apart, it also helps developers by giving them an alternative that does not involve paying huge sums of money. Competing technology is what makes the invisible hand of the market to go round (at the cost of mixing metaphors). MPEG LA begs to differ. Last month it issued a call for companies to submit patents they think may have been infringed by VP8. This is what resulted in the current investigation that just got initiated. Antitrust pundits are asking questions as to whether MPEG LA is making VP8 an unviable option by creating legal uncertainty and prospect of complicated and potentially expensive lawsuits involving Intellectual Property and usage rights.

The battle of standards is not new to the technology world; where several companies often simultaneously work on similar products. In the 1980s, the battle was over VHS and Betamax (VHS won). Some years ago, similar competing technologies HD and Blu-ray waged a format war (Blu-ray emerged ahead). More recently Flash became a huge bone of contention, when Apple decided not to support Adobe, in essence chosing HTML5 over Flash.