SAN FRANCISCO, 11 October 2006 — Google bought hot young video-sharing website YouTube on Monday in a $1.65 billion stock deal that the companies proclaimed was a natural for the evolving Internet.
The acquisition married Google’s online search prowess with a video-sharing website renowned for devotees but not revenues. “With Google’s technology and search leadership we will have the resources to take our services to the next level,” YouTube co-founder Steven Chen said during a telephone press conference with Google executives. “We believe this is just the beginning.”
Google said that it was drawn to YouTube because it was the clear market leader and had put together a “remarkable team” in a short time. “We think one of the keys to comprehensive search experience will be video,” said Google co-founder Sergey Brin. “On the whole it is hard for me to imagine a better fit with another company. YouTube really reminds me of Google just a few short years ago.”
Google’s stock price rose slightly to $431.75 a share in trading that followed the announcement of the deal, which came after the close of the financial markets in New York. “It will be interesting to see what happens next and what happens in the copyright world,” outspoken billionaire investor Mark Cuban wrote in a fresh weblog entry titled “I still think Google is crazy.” “I still think Google lawyers will be a busy, busy bunch.”
Cuban has referred publicly to YouTube as a lawsuit magnet because users freely upload digitized videos, television shows and other copyrighted material.
The blockbuster deal was announced on the same day that Google and YouTube unveiled agreements with major studios to post copyrighted music videos online.
The agreements were seen as efforts to pre-empt accusations of rampant copyright infringement at the online video-sharing sites and enlist studios as potential beneficiaries of the trend. The pacts will rely on advertising to generate revenues by encouraging users to click on companies’ links alongside the videos. YouTube was putting new systems in place to “fingerprint” copyrighted material so it could be tracked, said YouTube co-founder Chad Hurley.
Google and YouTube engineers already have dozens of ideas for handling ads, searches and videos, according to Google Chief Executive Eric Schmidt. “Most people believe that this is just the beginning of a video Internet revolution,” Schmidt said. “I think there is a whole new ecosystem and we are expecting to be a part of it.”
