Google’s deal to buy YouTube confuses me for two reasons:

  1. $1.65 billion is an awful lot of money. Is YouTube really worth that much to Google, even to take a competitor out?

  2. Google Video and YouTube seem pretty similar in look & feel, featureset, etc. So why is Google deciding to keep it as a separate brand? Perhaps they are planning to discontinue Google Video by merging it into YouTube. Keeping them apart would certainly seem like a waste of resources.

I’m sure Google know what they are doing - but I’m still confused. Thoughts?

Update 2006-10-11: There’s an (English-language) interview on the Der Spiegel website with Google’s North Europe chief, attempting to explain the deal. I’m not convinced. In particular:

'We want to carry on each brand and each product as it is. We don't plan to phase out YouTube or to completely combine the two firms.'

Why not?

Update 2006-10-15: Richard links to a BusinessWeek article where Steve Ballmer discusses Google’s deal. As the interviewer points out, he doesn’t seem too clear on it either. There’s also a moderately intelligent comment on Slashdot, of all places, with another theory.


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