Google beats Yahoo to acquire YouTube

The top search engine, Google, acquires the top vide sharing site YouTube.

Google has acquired YouTube for an astronomical figure of $1.65 billion in an all-stock transaction. The most expensive acquisition in the company's eight-year history. Both Google and YouTube gave their approval, which would officaly be closed in the last quarter of 2006. YouTube employees will not be laid-off and will remain at the company, including co-founders Chad Hurley and Steve Chen. 

Google gave Yahoo the slip, which was also in the bidding race till the very end. Just goes on to show, rumors in the Silcion Valley can turn into reality really fast!

But why on earth did Google buy YouTube when, Google has its own video site? Eric Schmidt, Google’s CEO, has the answer. Erics puts that YouTube was in a unique position and had a unique product offering that Google admired. Plus, according to most estimates, YouTube is the king of the online video service. It has almost 60% of the online video market share. Add to that a 100+ million videos per day. So, now you know why everyone thought that Google Video ain't going anywhere. Anyway, Google Video would continue - thought exactly how Google would differentiate the video offerings of Google Video and Youtube remains to be seen. 

With YouTube on the its Google, has major plans to be the market leader in online video streaming now. Google is willing to rule the online video distribution and online video ratings too. Beacuse if there are no ratings, there would not be any highly-profitable advertising either. Google is also inching towards building a rivalry against Nielsen in the ratings market. Plus, it’s collaborating with Apple on their upcoming iTV product. YouTube is just the ideal partner as it has the market share and more importantly, the data.

YouTube on the other hand brings a lot of things with it on the table. It has actively policed its site for copyright violations, when alerted by the rightful owner. Meanwhile, it has also got major players in the market to sign-in agreements to share their copyright content. The recent agreement being with Warner Music for content distribution and revenue sharing via YouTube. 

Confirming this awesome deal were some dignitaries from both the companies. Eric Schmidt remarked that YouTube founders Chad Hurley and Steven Chen, remind him of Larry and Sergey. Some compliment that!

Chad Hurley, CEO YouTube talked about the reasons he agreed to be acquired by Google. He said, that the culture in both the companies is very similar and Google’s ad platform - Adsense and Adwords - will integrate perfectly into YouTube. Steven Chen termed the acquisition as the "perfect match". With Google's platform and YouTube's innovative technology, he got it bang on target.

Sergey clarified that Google’s mission is to organize the world’s information. Video is avery imporatnt part of the information and future. He said that Google’s core strength lies in search and advertising. 

There are a lot of questions left unanswered right now. For example, How will be YouTube content will be integrated into Google? And importantly how that content will be monetized?

In future, both the companies said they would be working on potential integration points. YouTube might intergrate itself with Google Search, we don't know this as yet! More likely is that Youtube's current status as an Adsense publisher might be upgraded or would be taken to another level altogether.

Since its inception in February 2005, YouTube by the way has come a long away. The site has caputured the imagination of netizens, with more than 100 million videos shown every day. But, most of the content is copyrighted. YouTube so far ran with any profit. Visitors could upload and watch videos for free, which included videos from amateur webcam clips too. The acquistion with Google will change all that in a jiffy. Google has plans to attract the youth by offering space for advertisers on the YouTube site. 

This acquisition reminds of a statement made by YouTube Chad's. He said they (YouTube) would like to remain independent. He confirms they will "still" be independent under the deal. 

Dial G for Google the Doctor.

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