Google gives the content industries freedom to set their own prices, starting with Free. This will be popular with content providers, who hate Apple because Steve Jobs insists on setting his own prices for online music and video.
But Google does not allow video producers to set their own terms of use. Google Video has their very own, proprietary DRM that doesn’t let users save the video to their PC or portable players. No time-shifting, space-shifting, excerpting, or other hallmarks of fair use. Fair use is forbidden according to Google’s support documentation.
If Google wanted to be Not Evil, it would allow video producers the choice of providing content in DRM-encumbered or DRM-free formats. Video providers who wanted to allow users to download, time-shift, excerpt, and mash-up would be able to do so. Video producers who want to restrict content could do so too. If restricted content loses viewers to sources with more convenient terms, that would be neither here nor there to Google.
Many video producers who upload their content to Google Video are small non-commercial players, or obscure sources like this sushi documentary that have much more to gain from exposure than from restricting use.
Google gets a very small bye for beta — maybe giving content providers their choice of format is a soon-to-come future feature. If not, Google Video really is evil.