Google Acquires YouTube

Search engine giant announced today that it has agreed to acquire YouTube for $1.65 billion in a stock transaction, making the 18-month-old video-sharing website one of the fastest online success stories ever. Following the acquisition, YouTube will operate independently. The deal will turn YouTube co-founders Chad Hurley and Steven Chen into instant multi-millionaires and put Google ahead of its tech rivals as more and more companies jump on the bandwagon of the online video generation.

Earlier this summer, Google struck a $900 million dollar three-year deal to provide search and advertising services to MySpace and other News Corp. sites, beating rivals Yahoo! and Microsoft to secure the contract.

Announcing the deal, Google chief executive Eric Schmidt said the two companies were a natural fit.

“The YouTube team has built an exciting and powerful media platform that complements Google’s mission,” says Schmidt. “Our companies share similar values... together we are natural partners to offer a compelling media entertainment service to users, content owners and advertisers.”

YouTube shows more than 100 million videos every day. Users are allowed to create and share their own clips, as well as watch the work of others. The site has received some negative press lately because much of its archives consist of copyrighted material that has been illegally stored by users.

Last month Universal threatened to take legal action against YouTube’s owners for the indiscretions. This week it reversed its position and joined CBS and Sony BMG in partnering with the site. A number of television broadcasters are already loading their own clips onto the site.