Marissa Mayer, the Google executive who runs all the parts of the search engine, just put her legal team in a pickle. She told conference-goers yesterday at Fortune's Brainstorm conference that Google News, despite being advertising-free, makes $100 million in revenues a year. Fortune writer Jon Fortt explained Mayer's thinking:
The online giant figures that Google News funnels readers over to the main Google search engine, where they do searches that do produce ads. And that’s a nice business. Think of Google News as a $100 million search referral machine.
What neither Mayer nor Fortt explained: The real reason why Google doesn't put ads on Google News. That's because it fears lawsuits from the media organizations whose headlines and text it picks up and republishes. (It's already lost a court case brought by a newspaper group in Belgium). By not running ads on Google News, Google lawyers could argue it's not profiting from their work.
Mayer just shot a $100 million hole in that argument. When she puts a number on how much money Google News makes for her employer, she gives newspapers' lawyers a big, fat, juicy reason to demand a cut of the business. Sure, the newspapers already make money from the traffic Google sends their way — but do you think, given a $100 million prize, they won't try to double-dip?
Here's a suggestion: When Google finishes calculating their legal bill, they should dock it from Mayer's pay. As an early Google employee with a net worth estimated in the hundreds of millions of dollars and a penthouse apartment in the Four Seasons San Francisco, she can afford it.