If You Can’t Beat Them, Buy Them…

It was in 2006 when Google bought YouTube for $1.65 billion and it was an eye-popping amount then as Youtube was in its infancy with only 65 employees and one and a half years old company. In fact, many analysts said that Google overpaid and YouTube wasn’t worth its acquisition. But now, YouTube generates $1.65 billion in ad revenue every 3 weeks.

In retrospect, this is one of the best M&As in the history of Big Tech. Surely, the best consumer tech acquisition ever. When Google made a $50 million acquisition of Android in 2005, no one outside Silicon Valley knew what Android was. Unlike it, Google snapped YouTube when it was already famous globally and it was one of the first wild bets a tech giant made following the dot-com crash.

As goes with a popular business saying, if you can’t beat them, buy them… Google, after failing big time with Google Videos in comparison to YouTube, the company had a clear understanding of what users wanted out of a video site.

On the contrary, if Google never bought YouTube, the online video ecosystem would primarily be different in unforeseen ways. Just like how if Facebook never bought Instagram, the former’s stock would be lower and the latter would have fewer irksome updates asking users to follow their Facebook friends.

For the second quarter of 2021, YouTube accelerated into high growth, as ad revenue hit a record $7.0 billion for the period. Advertising revenue at the world’s biggest video platform jumped 84%, up from $3.81 billion in the year-earlier period when COVID put a dent on marketing spending. In the third quarter of 2020, YouTube brought in $5 billion in advertising revenue. Google’s advertising division brought in revenue of $37.1 billion, an increase from $34 billion in 2020. YouTube ads revenue increased 30 per cent from $3.8 billion.

The freaking investment is so evident that with every passing year, YouTube made brilliant ad revenues. After 14 years of snapping, YouTube stands at $15 billion in advertising revenue, which is nine times more than Google paid for it.