Google Inc. (GOOG) Uses Search Algorithm to Fllter “Alleged” Copyright Violators

Google Inc. (NASDAQ:GOOG) seems like it’s trying to be a good Internet community member and do the right thing when it says it has adjusted its search algorithm to “penalize” those Web site that have been accused of copyright violations with some of its content. The company has admitted that it takes those allegations into account now when listing search results; those sites which have a high number of these charges of copyright infringement are deliberately placed lower on the search results, thus makig them less likely to be seen by users.

However, is the algorithm really protecting users, or just protecting sites with user-generated content – like, say, YouTube, which is owned by Google Inc. (NASDAQ:GOOG)? That question is being raised on a couple of fronts. First, there are some questions as to whether Google Inc. (NASDAQ:GOOG) should even be a “police force” for the Internet, when there are plenty of cases of “alleged” copyright violations that were found to be wanting, or were not conclusive – and those charges already affected those sites in terms of reputation.

How this is perceived by users and investors will be very important for many hedge funds, as Google Inc. (NASDAQ:GOOG) is a favorite tech-stock holding of most hedge funds – including Dan Loeb’s Third Point, which had a $179 million stake in Google at the end of March. Check out the list of hedge funds that have big plays in Google stock.

On another front, Google Inc. (NASDAQ:GOOG) is getting a skeptical eye because the new search algorithm does not seem to “punish” user-created content sites like YouTube, which may be riddled with pirated content – just an oversight, or convenient? YouTube is owned by Google, so it likely would be difficult for Google to justify filtering out other user-generated content sites and keep letting YouTube through, so maybe the algorithm just lets them all through and tweaks the algorithm so that YouTube is at the top of even the user-created content sites.

Of course at this point, it is hard to tell exactly why Google Inc. (NASDAQ:GOOG) would change its algorithm this way, and why it would rely on “allegations” of violations as a basis for ranking results – risking further tarnishment of a web site without any proof and dramatically affecting traffic to web sites that may be completely legal and legitimate. Google might need to be very careful about getting into its form of Internet “enforcement.”