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Report: Google in talks to acquire YouTube |
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Written by asap
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Saturday, 07 October 2006 |
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The Wall Street Journal reported Friday that Google Inc. is interested in buying YouTube Inc. for about $1.6 billion.
Mountain View-based Google and San Mateo-based YouTube are still at a sensitive stage in the acquisition talks, the newspaper reported on its Web site.
The blog TechCrunch had reported on rumors of the acquisition talks. Google and YouTube officials declined comment.
"DAMN CHEAP"
Analysts said a Google acquisition of YouTube would make sense for both companies if the reported talks lead to a deal, especially considering Google's $10 billion in cash on hand.
"It's damn cheap for a company that already has a global presence," said Trip Chowdhry, an analyst with the San Francisco-based Global Equities Research. "YouTube's brand identity is no less than Google's and is no less than Coke's."
TO THE TOP
The acquisition would also immediately propel Google to the top of the online video heap. YouTube eclipsed traffic on Google's video site in February. By July, about 30.5 million people visited YouTube, compared with 9.3 million to Google Video and 5.3 million to Yahoo Inc.'s Yahoo Video, according to Nielsen/NetRatings.
THAT'S A LOT OF VIDEOS
YouTube users watch more that 100 million videos daily.
A BIT OF HISTORY
YouTube was founded in February 2005 by three former employees of eBay Inc.'s PayPal electronic-payment unit, and its chief financial backer is the Silicon Valley venture capital firm Sequoia Capital, which has invested $11.5 million. Sequoia was also an early Google investor.
PRECARIOUS POSITION
But many of the site's videos contain copyright material, putting it at odds with big media companies such as Universal Music Group. YouTube immediately removes videos when copyright holders complain, but analysts said the company is still in a precarious legal position.
"Google would be taking on all that liability," Forrester Research analyst Josh Bernoff said. | Only registered users can write comments.
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