According to an article published on October 10 in BBC NewsAfter a weekend of speculation about the deal, Google has bought the YouTube website for $ 1.65 billion (about € 1.315 billion). However, as announced by Google, both companies will continue to operate independently and Google will keep its Google Video service running.
Created in February 2005 in a California garage by Chad Hurley and Steve Chen, the YouTube site has grown by leaps and bounds to become one of the most popular websites on the Internet and the number one for video sharing. Its statistics are currently around 100 million videos viewed every day and approximately 72 million views per month.
According to Eric Schmidt, President of Google, "The YouTube team has created a powerful media platform that complements Google's goal of organizing the world's information and making it universally accessible and useful."
For their part, YouTube co-founders Chad Hurley and Steve Chen, aged 29 and 27, respectively, said they were attracted to the idea of adding Google's cutting-edge search technology to YouTube, in order to power provide its users with a more precise video search (The Guardian, 10/10/2006).
Under the agreement that both parties have reached, YouTube will keep not only its business name, but also all its staff, including the jobs of its co-founders.
In addition, the transaction will be made entirely in shares, so it will be tax-free for YouTube shareholders and will be cheaper for Google than paying in cash (Reuters, 10/10/2006).
According to Reuters, Google shares already rose by around 2% on Friday, when the news broke that both companies could be forging an agreement and, in these two days of negotiations, their market capitalization has increased by about 6,000 million of dollars, three times more than what the company has agreed to pay for YouTube.
According to analysts, the deal will quickly propel Google into the booming market for Internet video advertising, where it has so far only entered timidly compared to Yahoo and other companies.
In turn, Google President Eric Schmidt has pointed out that YouTube is "just one of the many investments" that Google plans to make in the field of videos.