Confirmed – Google buys

10 Oct 2006

Internet search giant Google has paid US$1.65bn to acquire social networking phenomenon, beating prospective players like Microsoft and News Corp to the chase.

It is believed Google’s acquisition will be on a stock-for-stock basis. Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community.

Google says the acquisition combines one of the largest and fastest-growing online video entertainment communities with Google’s expertise in organising information and creating new models for advertising on the internet.

It says the combined companies will focus on providing a better, more comprehensive experience for users interested in uploading, watching and sharing videos, and will offer new opportunities for professional content owners to distribute their work to reach a vast new audience.

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

“Our companies share similar values: we both always put our users first and are committed to innovating to improve their experience. Together, we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”

When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google’s own fast-growing video business. YouTube will continue to be based in San Bruno, California and all YouTube employees will remain with the company.

With Google’s technology, advertiser relationships and global reach, YouTube will continue to build on its success as one of the world’s most popular services for video entertainment, the company said.

“Our community has played a vital role in changing the way that people consume media, creating a new clip culture,” commented Chad Hurley, CEO and co-founder of YouTube. “By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners.

“I’m confident that with this partnership we’ll have the flexibility and resources needed to pursue our goal of building the next-generation platform for serving media worldwide,” said Hurley.

The number of Google shares to be issued in the transaction will be determined based on the 30-day average closing price two trading days prior to the completion of the acquisition. Both companies have approved the transaction, which is subject to customary closing conditions and is expected to close in the fourth quarter of 2006. was started by Chad Hurley and Steve Chen in Hurley’s garage on Valentine’s day over a year ago. Since then it has become one of the most important sites in the eyes of today’s generation of net users, allowing users to consume more than 100 million video clips and has 50m registered users.

Microsoft, Viacom, Yahoo! and Rupert Murdock’s News Corp are all understood to have visited’s Californian HQ to enquire about buying the company.

Last year Murdock acquired a similar player to called for US$650m.

By John Kennedy