Google acquires YouTube for $1.65 billion

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Search giant Google has shelled out almost £900 million ($1.65 billion) to buy online video star YouTube, confirming recent speculation that such a deal would take place.

The acquisition, announced yesterday, is expected to close by the fourth quarter of 2006.

The YouTube brand will not be lost as the company plans to continue operating independently, supported by the wider resources of its soon-to-be new parent company.

The move is designed to benefit both consumers and content providers by enhancing the viewing experience and offering new distribution opportunities, according to the companies.

Since its birth in February last year, YouTube has enjoyed phenomenal success and now boasts video viewing totals of more than 100 million daily.

Combined with the hundreds of millions of unique users Google touches and its search leadership position in many countries around the world, this new relationship will enjoy massive global reach.

When talking about the acquisition, Google hinted that this investment in video may not be an isolated one.

"This acquisition is an exciting next step in terms of our thinking about the evolution of the internet and video and one of many investments that we, Google, will be making to make sure that video has its proper place in people's online lifestyles on the internet, worldwide," said Google's chief executive Eric Schmidt.

"We believe the combination of Google and YouTube will create this very new and interesting global media platform for users, content providers and advertisers all around the world."

YouTube is equally enthusiastic about what lies ahead as a result of the deal.

"Google has demonstrated how great ideas can change the way people find and use information," YouTube's chief executive Chad Hurley said in a webcast discussing the acquisition.

"Right now, we're in the middle of a shift in digital media entertainment and users are now in control of what they watch and when they want to watch it. They decide what rises to the top.

"By joining forces with Google we'll be able to sharpen our focus on this vision to create a new media platform for consumers and partners to distribute media worldwide... and continue on our mission to offer the most entertaining online video experience."

Google's move will bolster its competitive position against those keen to eat into its market share.

Just last month, for example, software giant Microsoft confirmed that it is trialing a web-based video-sharing service called Soapbox.

The company is testing it with a select group of users. If successful, it plans to roll out the service under its MSN Video banner next year.

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