Google- YouTube talks still ambiguous

Speculations are high in air that the largest search engine on the Web, Google is in talks to buy YouTube, a popular free video hosting Web site that enables users to upload, view, and share video clips, for about $US1.6 billion in cash and stock.

Media reports cited a source familiar with the talks saying that Google and San Mateo, California-based YouTube are at a sensitive stage in the discussion, and the negotiations could break up at any given moment. A spokesman for Google declined to comment while on the other hand a spokeswoman for YouTube did not return calls for comment.

Though the status of talks is still ambiguous, but it would not be striking if Google was interested in the company which stemmed from nowhere to become the most popular Web site for Internet video.

Launched in February 2005 by three former employees of eBay Inc.'s PayPal electronic-payment unit, YouTube has grown quickly into one of the most popular websites on the internet. Today YouTube is one of the Internet's most popular social networking destinations, with approximately 20 million unique visitors a month watching millions of videos each day.

An estimated data till September 30 revealed that YouTube has almost half of the online video search market, serving over 100 million videos every day.

YouTube’s chief financial backer is Sequoia Capital, a venture capital firm based in the Silicon Valley, which has invested $US11.5 million ($3.5 million in November 2005 and $8 million in April 2006).

Earlier this year, when rumours circulated that some key media companies were interested in buying YouTube, the chief executive of YouTube, Chad Hurley had said that the company was not for sale and a future share flotation could happen.

According to market analysts, video hosting web site’s audience mixed with Google's ability to market advertisements could put the Mountain View, CA-based search engine giant in a high-grade position in the emerging market for video advertising.

Trip Chowdhry, an analyst with the San Francisco-based Global Equities Research commented on the reported offer price that "It's damn cheap for a company that already has a global presence," and added that "YouTube's brand identity is no less than Google's and is no less than Coke's."

Google has $US9.8 billion in cash and securities on hand, enough to seize the largest Internet video site. If the talks between the two become fruitful then it would ace out three major companies Microsoft, Yahoo and Rupert Murdoch's News Corp., all of which reportedly have visited YouTube's offices in recent months.

The possible future problem for YouTube and its potential buyer Google is that a great many users put up their favourite music videos and film clips, for which they have not obtained copyright approval. Universal Music has already claimed that YouTube owes the company millions because of infringement.

Google shares surged $US8.69 ($A11.68), or 2.11%, to close at $US420.50 ($A565.07) Friday on the NASDAQ Stock Market.