Michael Arrington has reported a rumour that Google “may be in the final stages” of a US$1.6 billion deal for video sharing behemoth YouTube.

If the rumour is true and the deal goes through it could be another coup for Google, though it might yet turn out to be a big headache for the search giant, as YouTube has some significant issues with regards to copyright and content control.

Nonetheless, YouTube is now a real A-list website among the world's internet users and surely it is just a matter of time before the founders accept an offer. The mooted valuation reflects the company's meteoric growth.

Google, for obvious reasons, told us that it couldn't comment on the rumour either way, as is company policy. YouTube is being reported as keeping schtum too.

YouTube has been at the centre of various takeover reports this year, but Arrington predicts the story is only “40% likely to be at least partially true".

He writes: “A quick phone call to a VC confirmed that the rumour is circulating (he also confirmed the price), but that is far from confirmation that this deal is happening. I’m digging for more but the source on this one is very good.

Last month, dotcom billionaire Mark Cuban said only a "moron" would buy YouTube because of copyright infringement fears.

YouTube has had a good year, with major content owners such as NBC snuggling up to it, when previously it had played hardball with the video sharing site following intellectual property concerns.

However, YouTube is also in the process of being sued by copyright owners and it remains to be seen whether the major content owners choose to embrace or ravage the company.

The news of this potentially huge acquisition has spread from TechCrunch like wildfire, having been cited in a Wall Street Journal article written by Kevin J. Delaney. Hundreds of mainstream newspapers have picked up on the news in the past 12 hours... another notch on the 'blogs = influence' chart.

Meanwhile news has emerged that Google is just one of a number of suitors, so we could be looking at the biggest pureplay internet bidding in the Web 2.0 era.

"There have been a lot of offers," reports FT.com (via MSN Money), citing an unnamed source. News Corp was one prospective acquirer named in that article, alongside a valuation in the range of $1.5-$1.6bn.

Let's see whether these rumours becomes a reality anytime soon. It may come down to who has the best relationships with the Big Media companies. Or, it might just come down to who makes the best offer... 

Chris Lake

Published 7 October, 2006 by Chris Lake

Chris Lake is CEO at EmpiricalProof, and former Director of Content at Econsultancy. Follow him on Twitter, Google+ or connect via Linkedin.

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Comments (1)


jey durai, designer at askdrweb

Here is my take. I think the main motive behind the acquisition is more towards video ad revenue rather than information accessibility. However, they had to pay a really high price for that along with many loopholes such as legal liability from copyright holders that could wipe out YouTube from existence like Napster. Another issue, is that copyright law is quite vague in terms of online interpretations and that could play a major role in Google’s legal liability. So, I would suggest that Google and YouTube spend some real time and money trying to convince these copyright holders to establish partnerships with them as they have with Universal and Sony. On another front, they are going to also motivate yahoo and microsoft to start advancing in their video services as well as possible acquisitions. If this becomes succesful, yahoo and msn are going to feel the pain of not taking action of acquiring youtube. Well, it is really the choices and the actions we take that really determine the success. Lets wait and see.

almost 12 years ago

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