Managing negotiation process / Google & Youtube negotiation

In October 2006, Google Inc. announced that it had reached a deal to acquire YouTube for US$1.65bn in Google Stock. The deal closed in November 2006.

I take up the negotiations from Friday October 9th 2006, with Google in talks to acquire YouTube after bidding 1.65Bn for it. Google will pay YouTube in Google stock which means that the owners could have a lot more than the $1.65bn in a few years time if Google continues to grow. YouTube investors Sequoia are rumoured to take $480M of this stock portfolio. Google claim that if negotiations are successful and the acquisition goes through, "YouTube will operate independently to preserve its successful brand and passionate community".

Google Inc. is an American public corporation, earning revenue from advertising related to its Internet search, e-mail, online mapping, office productivity, social networking, and video sharing services as well as selling advertising-free versions of the same technologies. Google was co-founded by Larry Page and Sergey Brin while they were students at Stanford University and the company was first incorporated as a privately held company on 4 September 1998 (Wikipedia.org). YouTube is a video sharing website where users can upload, view and share video clips. YouTube was created in February 2005 by three former PayPal employees (Wikipedia.org).

For Google the purchase gave the company the capabilities to tap into the potentially lucrative online video and social networking markets as some market analysts at the time criticised Google for being too connected and reliant on advertising linked to keyword searches. This acquisition would further strengthen Google 's stranglehold on online advertising and would give it an advantage over rivals such as Yahoo, Microsoft, MSN and NewsCorp (the company that owns MySpace). Experts at this time also felt that Yahoo, Microsoft & NewsCorp expressed an interest in buying YouTube, which probably stung Google into action, and precipitated their bid.

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