This wasn’t much of a secret, but it is a huge deal- Google buys YouTube for $1.65 billion in stock. Wow.
YouTube is a great service, and some friends of mine have expressed concern that Google’s involvement will somehow hinder YouTube in some way. I disagree. Companies acquired by Google have, for the most part, improved after their acquisition. Picasa, which used to cost $30, became a free application after it was purchased by the search engine giant, and has evolved into one of the best photo-organization tools available to PC users, even drawing comparisons to Apple’s much-loved iPhoto.
Read about the companies purchased by Google. In my experience, none have been harmed in any way by acquisition.
YouTube will instantly benefit from the resources Google can provide. We all know YouTube was burning venture capital like crazy due to bandwidth costs, and have been threatened with legal action due to (possibly illegally) hosting of copyrighted material. Google’s money, servers and legal team provides instant relief for both of these major issues, which were threats to YouTube’s future.
What does Google get out of the deal? Possibly the most important thing of all: mind share. While Google’s own Google Video got the job done when it came to video on the Web, it was somewhat clumsily implemented and simply didn’t have the mind share of YouTube. With YouTube, Google now owns the marquee name in online video, a space growing by leaps and bounds by the day.
In a few years, companies like Yahoo! and Microsoft will be kicking themselves for not ponying up the $1.65 billion. Maybe they already are.
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