I wrote the following as a response to a question posed to me on facebook. I’ve decided to make my response public because it reads more like a blog entry than anything else:

I’m predicting a fumble largely because I don’t think Google and Youtube can co-exist together in happy matrimony. Sort of like the couple that you never thought could ever date getting hitched after a matter of months, from my vantage there seems to be too many issues that will prevent a synergistic relationship from emerging smoothly from the acquisition.

At it’s core Google is a company run by engineers and highly technical people. Youtube is run by business people (Paypal/eBay Refugees)… the corporate DNA of the two companies is different, just look at the way the two business developed and established themselves in their respective niches. Google owns search (and the monies derived from its monetization) because of its brutally exacting ever evolving algorithm while Youtube owns video due to excellent timing (right place at the right time never hurt anyone) and understanding of who their core customer is. These two philosophies ultimately led to success for each of the firms individually, but I don’t see the business side of the equation fitting neatly under the fold of the engineering hierarchy without some sort of attrition amongst the individuals who lead the charge in hoisting Youtube to the top of the online video market.

On the Google side, think back. Google Video was started nearly a half a year before Youtube. The engineers, developers, and project managers involved with the product now have to come to terms with clear message that management sent through their acquisition, “Your product sucked, and we bringing people in who can do the the job correctly.” From what I’ve heard from colleagues at Google projects really die and resource aren’t really reallocated after the company deprioritized them. So this entire team that put together google’s video product is now going to have to deal with the fact that they’re playing second fiddle to people they once looked at as the enemy.

As evidenced by Time Warner/AOL, HP/Compaq, and to lesser extent eBay/Paypal tech companies seem to have a hard time with blockbuster mergers. If you take a look back at Google acquisitions over the last 9 years, you’ll notice that google has never spent over 100 million let alone 1 billion dollars on any one purchase. Google has already said that Youtube will be run as its own division separate from the rest of the company which suggests that management has acknowledged it’d be suicidal to rip and rebrand youtube has Google Video v. 2.0…

I’m just extending that concern by suggesting the true cost of the Youtube acquisition has the potential of costing significantly more than the 1.65 billion dollars of stock warrants they traded for control of company…

Oh, and I also agree with the bulk of the ‘Youtube as litigious DCRM honey pot’ issues Mark Cuban has raised on his blog, check him out he’s more obsessed than I am: blogmaverick.com

Filed under: Media, Internet Video, Musings |
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