Daily Archives: October 9, 2006

Google acquires YouTube for $1.65 billion

Update: Christopher Coulter just called this the “GooTube” merger. Heheh.

Wow, Google just sent me a press release that says it’s true. It has acquired YouTube for $1.65 billion in stock (update: sorry for the typo, I said millions earlier). Here’s the press release — congrats to everyone involved, and thanks to Google’s PR department for getting all journalists and bloggers this info at the same time. Great improvement over last press release.

TechMeme is going crazy about this news.

Will this work out for Google? I think it will. First of all, it makes Google a more interesting company to watch. Second of all, it makes it very clear to advertisers that Google is in the video business big time. This has caught the attention of all the big media buyers at places like General Motors and Procter and Gamble. These folks spend billions on advertising.

Now, will Google get sued over and over? Probably. But if you think that matters then you are missing the point. Did Microsoft’s legal troubles slow down its cash generation machines? No. Neither will Google’s. Plus, Google has demonstrated it’s fairly adept at working out deals with folks who produce content, or own it. Yeah, they’ll probably lose a few battles in court, but that’s like losing a battle or two but winning the war.

I do note that Google’s stock is up. Yahoo and Microsoft’s are down.

Another angle? Google is getting over its initial engineering-driven arrogance. You know the kind. Where when you show engineers/geeks/developers something like YouTube they answer “we can build that in a few weeks.”

I heard that over and over again at Microsoft and my friends at Google say it a lot too. It’s called “not invented here” syndrome. The fact that someone told the Google Video folks to sit down and be quiet during this deal is pretty significant. That’s a sizeable change from previous times when Google was looking to acquire companies.

It also means that the price for new companies has just gone up dramatically and that the venture capital barn door is gonna totally unlock as investors chase down “flip to big company” deals. I’m not saying there will be another YouTube, but investors get ancy when they see other people making big bucks.

Update: My brother, Alex, just IM’ed me: “another missed opportunity for microsoft.” Exactly. What are those bean counters doing with all that money? I guess they want the entire advertising world to go to Google, huh?