The buzz over yesterday's acquisition announcement of YouTube by Google for $1.6 billion in stock continues today in the media.
The fact that this is the largest of any acquisition made by Google in it's eight year history, contributes to the search for a broader meaning.
A post by Tristan Louis counts up internet acquisitions in recent years as follows:
"So yes, Google is paying $1.65 billion for youtube, Ebay spent $2.6 billion on Skype (making the Google/YouTube deal look like a cheap deal), and News Corp. paid $580 million for MySpace (making them look frugal compared to the other two big deals) but the truth is that, across 20 major deals, those 3 stand out as the exception and not the rule.
It appears that, on average, deals are generally below $50 million and, in most cases, lower than $10 million."
I'd like to point out another acquisition by Google not yet on his list, made in the beginning of the year. The acquired company was dMarc Broadcasting, which connects advertisers to radio stations via an automated system. The price agreed to be paid by Google, was over a billion dollars over three years, as the press release reminds us:
"Google will acquire all of the outstanding equity interests in dMarc, a privately held company, for total up-front consideration of $102 million in cash. In addition, Google will be obligated to make additional contingent cash payments from time to time if certain product integration, net revenue and advertising inventory targets are met over the next three years.
The maximum amount of potential contingent payments is $1.136 billion over the next three years."
It's too early to know if the price will cross a billion dollars, but it would make the fourth billion dollar plus acquisition on Tristan's list.
But multi-billion dollar acquisitions by internet companies do not necessarily indicate anything more than strategic and tactical moves by industry incumbents.
Mostly it's just about turning features invented elsewhere into integrated products on a hopefully accelerated and well-executed path, a subject touched on in an earlier post.
It's another way to say "Build it and they will come".
Michael,
I think GOOG's Ytube acquisition was great. GOOG has market leadership in search & this acquisition further propels their search business exposure.
GOOG has more bargaining power with the big media firms such as WBs, Universal etc & thus they will be able to negotiate deals Ytube alone couldn't have, or at least not with the upper hand.
This was a key step because as you know GOOG has been forging alliances that will keep it at the forefront of visitors, be it search or anything else. The alliances with Dell, the acquisitions of Keynote & the radio company, like you pointed out & now YTube give GOOG the upperhand once again from search to entertainment.
Once again GOOG has zoomed past MSFT & Yahoo. All of these & more upcoming acquisitions will not only help google stay ahead of their competitors in search & entertainment but will allow GOOG to leverage their core strengths through out these properties.
Posted by: Yaser Anwar | Tuesday, October 10, 2006 at 07:28 PM