Google Buys YouTube for $1.65 Billion

On Monday, Internet search giant Google announced that it would purchase video sharing sensation YouTube for $1.65 billion in stock. The deal gives Google the upper hand in the emerging market for home-made and popularity-driven online videos, a market that YouTube itself started less than a year ago.

According to reports, companies such as Microsoft, News Corporation, Viacom, and Yahoo were all interested in purchasing YouTube as well. But Google's bid was apparently higher than the others, and Google of course is dominant in many other online markets, so it brings a wealth of related services to the table as well.

Under terms of the deal, the YouTube site will retain its name and branding, and YouTube's small staff will remain in their San Bruno, California offices and not move to Google's main campus. YouTube's ex-CEO, Chad Hurley, says the deal essentially allows YouTube to continue existing as an independent entity.

YouTube was founded in late 2005 and now has over 50 million users, a rate of adoption that is almost unheard of online. Companies and services such as MySpace, Microsoft, Google, and Yahoo have attempted to ape YouTube's model, but none have attracted even a small fraction of YouTube's fervent user base. That said, YouTube hasn't exactly been a financial success, due largely to the expense of streaming video and a poor advertising strategy.