Google to buy YouTube for $1.65 billion

— 4:13 PM on October 9, 2006

Last week's rumors about Google planning to purchase YouTube were almost spot-on. The search giant has announced that it has agreed to acquire YouTube via a $1.65 billion stock swap. Rather than swallow up YouTube into its Google Video service, though, Google says YouTube will continue to operate independently in order to "preserve its successful brand and passionate community." YouTube will also keep its 60-employee staff and San Bruno, California offices.

As we reported last week, YouTube held 42.94% of the video search market between February and May this year, while Google had 6.48%. Unless those figures change dramatically, Google may end up with somewhere around half the video search market once the acquisition is finalized later this quarter.

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