Google Has Acquired YouTube

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Moments ago the deal was confirmed. In their largest acquisition to date, Google has acquired YouTube for $1.65 billion in an all stock transaction. Both companies have approved the deal, which should officially close in the fourth quarter. YouTube’s 65 employees will remain with the company at YouTube’s San Bruno headquarters.

Details are also emerging that Yahoo was in the bidding war until very close to the end.

Google is hosting a conference call and webcast to discuss the deal. My notes are below, and a recording of the call is here. You can also hear a replay of the call via telephone until midnight Monday, October 16 at 888-203-1112 domestically and 719-457-0820 internationally. Confirmation code for the replay is 2260624.

This went from rumor to reality incredibly fast.

My Notes from the call:

Eric Schmidt, Google’s CEO, Chad Hurley, YouTube’s CEO, David Drummond, Google’s General Counsel and others are on the call.

Eric is starting the call and immediately started talking about the content deals announced today. He says Chad Hurley and Steven Chen, YouTube’s founders, remind him of Larry and Sergey.

Chad is now talking about the reasons he agreed to be acquired by Google. He says Google’s ad platform will integrate perfectly into YouTube. Says the cultures are very similar.

Steven Chen is now talking, saying that Google’s platform combined with YouTube’s “innovative technology” is a perfect match.

Sergey say “Google’s mission is to organize the worlds information…and video is an important part of the worlds information”. Says Google’s core strength is search and advertising.

Questions just started. I’ve put myself in the queue to ask about the Fox/Myspace angle.

Mary Meeker at Morgan Stanley is first. Asking about YouTube content and how it will be integrated into Google. And how content will be monetized.

JP Morgan is asking about why all stock, and why buy YouTube when Google has its own video site. David Drummond says its a stock deal to make it tax free to YouTube shareholders. Eric says that YouTube was in a unique position and had a unique product offering that Google admired.

Question about YouTube’s new technology to auto-recognize copyrighted content.

Question about “pre-roll ads”. No real answer here. Saying they will look at all options.

Question about revenue shares given to content providers and how the company was valued. Not anwered – “we do not go into details on financial deals”. Eric is saying that deals are very good for partners. David Drummond says they arrived at a purchase price that is “very fair”.

Lots of questions on copyright issues.

ABC News question on integration between Google and YouTube. Steven Chen says they are working on a list of potential integration points, will take weeks to sort out. Sergey is saying that integration with search is going to be important, and that they will be experimenting. Eric is saying that Google Video is not going away.

Question about the bidding war for YouTube. No answer.

Great question about Chad’s statement this summer that YouTube plans to remain independent. Chad says that they will stay independent under this deal, so best of both worlds. No real way to answer this question.

That’s it. As usual with these type of calls, I wasn’t able to ask a question. :-)

Congratulations to YouTube on this deal. I remember when I first wrote about YouTube in August of 2005 (I wrote that post from a Starbucks while on a road trip), and meeting Chad Hurley at the very first TechCrunch party.

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