I feel the need to shed some light on the discussions going on here due to some misinformation.
The problem with international domains is that their intended use is for local businesses and websites to target people in the country that owns the registry for that particular gTLD. In the case of .CO, that would be Columbia. However, some international gTLDs have broken free of their “local” usage and have been able to successfully brand their domain for generic usage worldwide. What I mean by breaking free is that they have established a usage in other countries other than their own and as a result, major search engines like Google will sometimes allow the geographic target of these domains to be changed to match the country in which the website is intended for. For example, Montenegro has the .ME domain which spell the English word ME and that has proven to be highly marketable around the world. Google allows you to change the geographic target for domains in this namespace. The same can be said for the country of Tuvalu which has marketed .TV to stand for television and has the same ability for a geographical change. Interestingly in their case, they have turned over management of their registry to Verisign (a U.S. company) to help manage domain registrations through the .TV Corporation. This is presumably why registration costs are $39 for generic domains and much, much more for premium domains.
What Matt Cutts means by this is that there are some international gTLDs that Google recognizes as generic due to their “alternative” meanings. As outlined above, .ME can be used to mean “me”, .TV can be used to mean “television” and there are some others like .FM (FM radio stations), .AM (AM radio stations), etc. Whether or not this is the case for .CO domains is up for debate because I don’t currently own any and I can’t verify whether Google will allow you to change the geographical target like you can for the others I mentioned. With that said, let’s say for the sake of this argument that .CO CANNOT be changed, then it’s not that Google doesn’t treat it like a .COM per se…what it means is that Google will usually only show .CO websites to people originating from Columbia (based on IP address). The distinction would be that .COM is generic and used worldwide and .CO is used in Columbia. Now, if the marketing ploys by the people running the .CO registry have worked, then the world may very well be adopting .CO as a generic term to mean COmpany, COrporation or something else and if that happens, Google will then allow you to geographically change locations for your .CO websites. If that hasn’t happened yet, then it’s sure to because like others have pointed out, .CO is starting to gain worldwide traction.
As mentioned above, some international domains DO NOT qualify for this change. I for one know this because I own a .GY domain and it’s stuck being targeted to the people of Guyana. 
Matt Cutts however has said that this can change, but it’s on a case by case basis and it would only change if there was more demand from around the world for such domains.
I have to agree with fegall here. It hasn’t happened yet, but it could. And while there may be a huge outcry, there’s nothing anyone could do because nobody is “stealing” anything. When you register a domain, you don’t OWN it…you’re simply paying a lease for it. The lease cost is your annual bill. In fact, there are many factors in which a registry can cancel a domain you registered. One of which is invalid contact info! Don’t be foolish to think that domains are some kind of internet real estate. What fegall said is even more important to remember when dealing with international domains. Some countries are very small and if they lack the economical ability to continue running their gTLD registries, then goodbye domains! Or worse, what happens if some crazy dictator wanted to change the rules and restrict registrations to only citizens of that country or hike the registration fees up hundreds of dollars?? The list of possibilities goes on.
How was he being naive? .COM does not and has never belonged to any country. Sure it was created here along with the concept of the internet in the United States, but it was always intended to be a worldwide effort. The registry responsible for managing and maintaining .COM domains is Verisign. They also take care of .NET and have partial responsibilities for .GOV, .NAME, .CC and .TV. While Verisign is an American company, it’s not part of the government. More importantly, the US government has nothing to do with gTLD registries.
I went to Walmart.co and there’s a generic Apache page there. Are you sure Walmart is using .CO for any particular purpose? In fact, the registration data has some random guy’s name listed…he may not even be connected to Walmart in any way. Besides, if big companies are registering .CO domains, it’s just a matter of keeping them out of the hands of trademark infringers. In the case of Google, they actually run localized servers in many countries so they may at some point want to allow residents of Columbia to have access to a Columbia-specific search engine located at Google.co. Point being, none of these reasons are good enough to argue the statement that .CO domains are the next big thing.
In my opinion, people are registering .CO domains on the off chance that they can catch typos from people trying to get to the dot com variant. This could change however. If people start recognizing .CO domains as easily as others that already exist, then it’s possible. But until then, if you tell your friends to go to example.co, they will probably say, “You mean dot com, right?”
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