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Google buys YouTube, reveals video plans

Site will continue to operate independently

Google has laid speculation to rest – it has officially announced the acquisition of YouTube for $1.65bn (about £890m) in a stock transaction.

YouTube operates a wildly popular website showing original videos in a range of quality from amateurish to professional. It will continue to operate independently after the acquisition "to preserve its successful brand and passionate community", Google said when it announced the deal last night. The deal is expected to close in the fourth quarter.

Although YouTube chief executive and co-founder Chad Hurley had previously insisted that YouTube wasn't for sale, that view changed because Google will allow YouTube to operate independently, he said during the conference call.

Bringing YouTube into the ever-growing Google empire will mean that users have a "better, more comprehensive experience" when they upload, watch and share videos, Google said. It will also provide more opportunities for professional content owners to get their work out to a wider audience, Google and YouTube executives claimed.

The two have similar corporate values in that they're both committed to users first and also to innovation, according to Google chief executive Eric Schmidt. "Together, we are natural partners to offer a compelling media entertainment service," he said.

Schmidt added that YouTube has built a remarkable team that is "a perfect example of the kind of people we like to work with", and that Google expects to sign other deals that are related to providing video over the internet.

YouTube will benefit from Google's global reach and technology know-how. "We're excited by this announcement and thrilled to join forces with the Google team," said Hurley. The acquisition will boost YouTube's new video content platform, which is expected to launch in the next month and is also expected to help advertisers by allowing more video adverts on the sites operated by the merged company.

Although Google executives adamantly said otherwise, Hallerman, a senior analyst at Emarketer in New York, doesn't think there is a future in the YouTube brand name. "YouTube is a silly name," he said. "Google will get rid of it over time."

Perhaps a more obvious fit is that the companies will merge Google's search expertise with YouTube's video expertise, pushing what executives believe is a hot emerging market of video being offered over the internet. Google Video will continue to operate, with executives calling that service "a very valuable aspect of the Google experience".

YouTube, founded only in February of last year, has more than 70 million videos viewed daily on the site, according to the company. Besides allowing video viewing, the site has become a social-networking phenomenon. Among other things, it has contests where viewers choose their favourite videos, including those submitted by musicians.

Separately, both Google and YouTube announced deals with recording companies for displaying music videos online, in what is seen as a means to avoid copyright infringement lawsuits. Sony BMG Music Entertainment and Warner Music Group both signed deals with Google for their music videos to be on the Google Video website while Sony and Universal Music Group signed deals with YouTube to make their video content available on that site.


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