Enemies bring Google and YouTube together

Wired on Friday: It is, it would seem, very un-Google-like behaviour, even for a company that's been wandering from its founding…

Wired on Friday: It is, it would seem, very un-Google-like behaviour, even for a company that's been wandering from its founding principles. This week, the search engine giant announced its purchase of video-sharing website YouTube.com.

Despite widespread rumours of the acquisition, the figure was something for everyone to gape at: approximately $1.65 billion (€1.31 billion) worth of Google stock - some 1.25 per cent of the company's current share.

Google has bought companies before. The most visible acquisitions for most irregular Google users would be Picasa and Keyhole. Picasa's photo management software and Keyhole's global mapping program are now both offered as free downloads by Google.

But the general rule for the search engine has always been: "Google builds, it doesn't buy." And when it does, it's either for a mature application or technology it could not develop in-house, or else to obtain the sort of high-octane PhD geniuses that would let it do so in the future.

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When Google purchased "Measure Map" from web analysts Adaptive Path, the understanding was that it was to obtain their well-known staff, not just their product.

But times are changing: last week, Google co-founder Sergey Brin announced that he was leading a companywide move called "Features, not products", to encourage Google employees to stop developing new Google-branded services, and concentrate on improving the existing products.

And now, Google buys YouTube. The amount, for a site that has been running less than a year, was staggering. For a video-sharing site that shares much with the company's own internally-produced Google Video site, it seemed to undermine the "buying for the technology" line. The company is to be run separately from the main Googleplex and will keep the YouTube name. There will be no cherry-picking of staff (although Google's founders Brin and Page commented that they found YouTube's co-creators Chad Hurley, Steve Chen and Jawed Karim to be like "younger versions of themselves"). It's the very opposite of the traditional Google way.

So what does Google get for its billion and change? Well, it gets the site that beat Google at its own game - simplicity.

Google video was an ambitious project that took Google into developing their own video format, and required users to download and install a special plug-in. Uploading your own video was tricky. The hardest part of sharing video - negotiating the rat's maze of incompatible video sizes, standards and files, was left with the struggling end-user.

YouTube, by contrast, just worked. It was easy enough for a 12-year old with no tech knowledge to manage. That gave YouTube its first, most dedicated and most lucrative market - the flighty 12-17-year old demographic, goofing off in front of their webcams.

That leads to the other asset YouTube can bring to Google's table: an audience. Google is not that short of users itself, of course, but it makes its money from selling space on other people's sites. A great deal of free, in-house advertising - particularly video advertising, which is high-premium but hard to place - is not to be sniffed at.

Remember that Google cut a $900 million deal recently with Rupert Murdoch's MySpace for a pure advertising arrangement.

YouTube's audience and appeal, moreover, continue to grow. Unlike MySpace, which fights for coolness and legitimacy with other social software sites, YouTube is the only game in town. That's why, when clicking through its clips, you are as likely to find, say, a Mandarin-dubbed upload of a recent snooker game or a Bollywood clip, as American kids engaging in smack-downs. Even the British Cabinet Office found it easier to upload public service films than distribute them elsewhere. Its top hits were Sharing - The Leadership Challenge and Transformational Government, before the second was pulled for copyright reasons.

Just as eBay has locked down the majority of auctions, so YouTube has stolen the march in gaining short video content.

Which, curiously, for most potential buyers, would be enough to turn YouTube into a poisoned chalice, not an attractive acquisition. The problem with YouTube's popularism is its cost. Video is expensive in terms of bandwidth.

Back of an envelope sums indicate that YouTube was burning through $1 million - $2 million a month to allow its users to download endless video for free. And, as the British Cabinet Office discovered, there's another potential liability waiting in store for YouTube.

For a determined copyright lawyer, the site is full of potential unauthorised reproductions, all begging to be removed.

Which brings us back, once again, to Google. Cheap bandwidth and copyright fair use are two of the pillars on which Google is built. The last few years have seen it using its power in the marketplace to ensure that it will always have enough bandwidth, and now it is strengthening its legal and lobbying departments to defend its right - and its users' right - to a flexible copyright regime. It's a win all, lose all fight for Google.

YouTube seemed a poor bet for acquisition outside Google because of bandwidth costs and copyright liability. Inside the Googleplex, it is in common cause with the biggest internet company in the world. Google and YouTube may have been brought together less because of their synergies, but more because of their common enemies: and the profits to be made if they are successfully defeated.

Danny O'Brien is activism coordinator of the Electronic Frontier Foundation