Google Buys its Way to the Top of the Online Video Market

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Google Buys its Way to the Top of the Online Video Market

7:00 am on October 10, 2006 | Category: Business, Web Services, Television

Internet search giant, Google, has agreed to exchange $1.65 billion of its own stock for full ownership of YouTube, the leading online video content portal.

Such a deal has been rumored for the past several days, and was reportedly negotiated in under a week. It represents the largest single acquisition in Google’s eight-year history.

Many analysts remain skeptical that this acquisition is good value for the search engine, especially considering that YouTube has only 67 employees, and was founded just 19 months ago. The site’s immense popularity, however, was apparently enough to inspire this massive purchase.

“The YouTube team has built an exciting and powerful media platform that complements Google’s mission to organize the world’s information and make it universally accessible and useful,” commented Google CEO, Eric Schmidt, in a statement.

The search giant’s own attempt at cracking the online video market – namely Google Video – has met with moderate success over the past few months, but hasn’t managed to keep up with a number of leading competitors. By acquiring YouTube, Google has bought itself an automatic #1 spot in web-based video, as well as control of the market’s top brand.

It is quite likely that we will now see Google Video being merged into its former competitor, further contributing to the Google Adwords cash cow, and putting the search leader at the top of yet another market, ahead of longtime rivals, Yahoo and Microsoft.