Google Buys Youtube for 1.65 billion

Martin Brinkmann
Oct 9, 2006
Updated • May 15, 2013
Internet, Youtube

The rumor mill went crazy in the last couple of days about a possible acquisition of the video portal YouTube by Google. The  deal was officially announced by Google and YouTube in a press conference the company held earlier today. Google paid a total of 1.65 billion Dollars in a stock-for-stock transaction to acquire the popular video hosting website.

Information about the deal are scarce. What we do know is that Google will keep the YouTube brand and use it from this moment on as one of its own. YouTube will continue to operate from offices in San Bruno, California, and not a single employee will lose their jobs in the process.Why did Google make the acquisition? The company operates its own portal Google Video which stands in direct competition with YouTube.  The main reason is of course YouTube's larger appeal and that the company's own video site never stood a chance against the rising star of YouTube. So, instead of pumping resources into Google Video, Google decided to buy YouTube instead and use it as the company's own portal.

I would be very surprised if Google Video would not be merged into YouTube in the process, there is obviously no need for two video sites in Google's portfolio.

So, what is most likely to happen in the long run? We heard rumors about Google Video ads and YouTube would be an ideal candidate for this kind of ads. I think that we will see some sort of ads in the long run on YouTube, maybe before the original video is shown just like sites as or do it for some time.

What is your opinion on this? Is it a good move, a bold move, a stupid one ? Let me know.

Update: Turns out that Google was right. YouTube is the most popular video hosting site on the Internet, and while it still does not seem profitable, it is likely that it will turn over a pretty penny in the long run. As far as ads go, YouTube has started to show ads before some videos, and also ads over videos on the site.


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  1. Kody said on November 23, 2006 at 9:28 pm

    Hey guys,
    I have an iMac G5 running tiger 10.4.7 and I an having a wierd problem. Whenever I go to a site that has an embedded youtube, flash or some kind of video, there is no sound. If it a quicktime file there is no problem. There is not sound no matter what broswer I use, firefox, camino, safari, or shiira. And keep in mind that about a week ago I was not having this issue.

    Help Would be awesome

  2. Marc-O said on October 12, 2006 at 3:35 pm

    Also, for people thinking about the lost of some purity – seeing ads on YouTube – well, it was inevitable. YouTube had no ad-free future, economically, it made no sense. They build a lot of free stuff, and provided a strong server/bandwidth architecture to support all that streaming – and ask for nothing in return?

    Google can turn YouTube into something economically viable, and while I do prefer the freebies, I don’t think that the google ad model is that harmful for the internet as a whole.

  3. Marc-O said on October 12, 2006 at 3:31 pm

    I don’t buy into the Google-conspiracy theories. Getting into video fits really well into their commercial scheme – selling publicity.

    To conquer the video market – they need two things they didn’t quite achieved with google video – a lot of videos, and a user base. Things YouTube has. Now that google has put his hands on these data sources, cross-reference that with the data from the google search engine…

    I guess, with enough data, they’ll start building a video ad sensor, built up with personal data. And if that works, what can they do? Become a middle-man between announcers and video broadcasters. Or even become a broacaster itself, sending the video you want, bundled with “intelligent” video-google-ads.

    As much as Google has a lot of cool features and etc. what makes its economical power is ads – and provided they can move into another field of ad-providing, their future looks great.

  4. Joey said on October 12, 2006 at 8:52 am

    Sooner or later they’ll purchase myspace, then yahoo, and then who knows what!

  5. Kishan said on October 10, 2006 at 9:26 am

    i totally agree with Joey..Google do have some great services but i also liked youtube and think its a really bad thing for the world

  6. Joey said on October 10, 2006 at 1:30 am

    This is a bit scary. No matter what Google paid, they are getting a deal. Google is getting too powerful for the internet. Google has some great stuff and I use them, but what are the rest of the internet community going to do under the foot of a giant. I’d say it’s a potentially bad move for the world, good move for google. Google has enough good services. Youtube should have stayed in competition.

  7. synthetron said on October 9, 2006 at 11:59 pm

    Please join us in the collaboratively filtered realtime discussion:

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