Business Case Studies, Mergers, Acquisitions and Takeovers Case Study, YouTube’s acquisition by Google,Issues and Challenges

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Case Title:

YouTube’s acquisition by Google – Issues and Challenges

Publication Year : 2007

Authors: Jyothi R Javalgi, Doris John

Industry: Automobiles

Region:US,Europe

Case Code: MAA0095C

Teaching Note: Available

Structured Assignment: Not Available

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Abstract:

YouTube, the most popular video sharing website boasted of a viewership of 34 million visitors each month and its users watched more than 100 million videos per day. Started as a viral video site it had grown to a Web phenomenon within a span of one year and remained one of the key instances of success in Web 2.0. Though the content on YouTube was entirely user-generated some people posted music and videos they did not have the right to post thereby violating copyright laws. However, YouTube immediately removed the clips once a copyright violation was brought to its notice. To avoid potential lawsuits the company had signed agreements with various music companies and was in the process of creating technology that would help identify and prevent copyrighted material from being uploaded.

Despite the fact that user generated video websites were a great success, YouTube did not have a proven business model and was unclear about how it would generate revenue in the future. On October 9, 2006, Google, the world leader in Internet Search announced that it would acquire YouTube for US$1.65 billion in stock which was considered the most expensive deal made by Google during its eight-year history. This case gives an overview of the inception of YouTube, its growth and the reasons for its prime success on the web. It also depicts the possible synergies and challenges that would emerge following Google’s acquisition of YouTube and how it would facilitate YouTube deal with its copyright infringement troubles and adopt a profitable business model.

Pedagogical Objectives:

  • To discuss success strategies for web 2.0 companies
  • To discuss how companies can integrate acquired companies into their business model.

Keywords : Mergers,Acquisitions,Alliances Case Study;YouTube; Google; Web 2.0 companies; Social Networking sites; Acquisition; Video sharing websites; Chad Hurley; Eric Schmidt; MySpace; Google Video; YouTube's copyright issues Web Traffic; Competition; User generated content; Viral video sites

Contents : 
About YouTube’s success on theWeb
YouTube’s Challenges
Google’s Acquisition of YouTube
Synergies and Issues
Web traffic of leading video sharing websites
Website traffic information of video sharing companies

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