YouTube May Go To Google for $1.6 Billion

By Sid Yadav    October 6th, 2006

Google-YouTube

UPDATE: GOOG shares have gone up $11 in the past 8 or so hours. Everyone’s reporting on this, including the NYTimes, so I think it’s gonna happen. HitWise has some stats.

Following on a report by Michael Arrington a few hours ago, WSJ reports online video sensation YouTube may indeed be in talks with Google for a rumored $1.6 billion acquisition. Such rumor-fads are generated all the time — and usually turn out to be false — but for some reason I have a gut feeling this isn’t one of those.

Since this report is still a highly possible-rumor, there isn’t much to say on its validity yet, nor are there any details other than the $1.6 billion price-tag. What will be, will be, but till then here are 10 reasons why I think Google HAS acquired YouTube:

  1. Google Video has been a failure.
  2. Contextual advertising can’t feed them forever.
  3. With the exception of Google search itself and GMail, Google hasn’t had a single product which has reached the same level of critical mass as YouTube has.
  4. They supposedly said ‘thanks, but no thanks’ to MySpace in their early days, and don’t want to let that happen again with YouTube.
  5. Google Video’s content sales have been low, but they have partners, and feel they could use them and boom ahead with YouTube.
  6. Google could easily pay for YouTube’s bandwidth bills, so that isn’t much of a problem.
  7. Half of the web’s traffic comprises of Google with search, YouTube with video, and MySpace with social networking. Google wants 2/3.
  8. Yahoo! bought JumpCut and Sony bought Grouper. YouTube’s clearly next in the line, and Google’s hasn’t acquired anything in a while.
  9. Google’s possibly the quickest company which could come up with $1.6 billion in lump sump, if that’s the kind of thing YouTube is looking for.
  10. Both Google and YouTube were started ‘from a garage in Menlo Park.’ Co-incidence? ;-)
  11. BONUS: Google’s shareholder’s sons and daughters use YouTube, and they want to impress.

[tags]Google, YouTube, Acquisitions, Online Video[/tags]

Most Commented

  • erik
    This could definitely be very exciting - but how much cash is Google sitting on? They've spent quite a bit already.
  • Erik,
    You have a good point. Recently Google also made the announcement that they'll stop releasing new products and start developing the existing ones. This may have a lot to do with the fact that they're overloaded, but I think it has its own financial side to it.

    Although, it's notable that their shares are now on $420, gone up $8 in the last day alone -- see the effect a YouTube rumor has on people? ;-)
  • Erik
    I hadn't heard their announcement to focus on current products instead of new ones. I have read many articles on the lack of success for almost all of their products - a little focus and a big push could go a long ways. They've had some recent updates, ie Reader, that has shown some great improvements - I'm looking forward to many more.
  • Erik, Google is worth in the hundreds of billions. They're clearly wealthy if they can buy YouTube outright :)
  • I was thinking this was going to be another cash expenditure like they've done with some past billion dollar deals. The stock exchange makes a lot of sense and certainly provides Google with all sorts of buying power.
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