Google announced today that it had reached an agreement with Viacom that will avoid a media debacle over YouTube users privacy:

As we let you know on July 4, YouTube received a court order to produce viewing history data. We are pleased to report that Viacom, MTV and other litigants have backed off their original demand for all users’ viewing histories and we will not be providing that information. (Read the official legalese here.)

In addition, Viacom and the plaintiffs had originally demanded access to users’ private videos, our search technology, and our video identification technology. Our lawyers strongly opposed each of those demands and the court sided with us.

We’ll keep you informed of any important developments in this lawsuit. We remain committed to protecting your privacy and we’ll continue to fight for your right to share and broadcast your work on YouTube.

The agreement stipulates that Google will anonymize their log data before sharing it with Viacom:

Substituted Values: When producing data from the Logging Database pursuant to the Order, Defendants shall substitute values while preserving uniqueness for entries in the following fields: User ID, IP Address and Visitor ID.  The parties shall agree as promptly as feasible on a specific protocol to govern this substitution whereby each unique value contained in these fields shall be assigned a correlative unique substituted value, and preexisting interdependencies shall be retained in the version of the data produced.  Defendants shall promptly (no later than 7 business days after execution  of this Stipulation) provide a proposed protocol for this substitution. Defendants agree to reasonably consult with Plaintiffs’ consultant if necessary to reach agreement on the protocol.

The agreement lets both companies avoid the media feeding frenzy that was coming if Google shared users’ private viewing information.

However, Google has still failed to unambiguously state that it will not share users’ private information, and they appear to be headed for a protracted legal battle with Viacom. This means that Google will forced to continue treating user-generated content as deadweight, and may make it impossible for Google to achieve their top goal for 2008, figuring out how to make money from YouTube.