By the summer of 2006, YouTube was only a year old — but it was already the fastest growing website on the internet. Hundreds of millions of videos were being watched every day, and the platform was adding users at a pace that nobody in Silicon Valley had ever seen before. It was loud, chaotic, legally risky, and wildly popular. Google wanted in.
Google Comes Calling
Google wasn't the only company circling YouTube in 2006. Yahoo, Viacom, and other major players had all taken notice of the platform's staggering growth. But it was Google — fresh off building the world's dominant search engine — that moved fastest and most aggressively. Google CEO Eric Schmidt and co-founder Larry Page saw in YouTube something that Google Video, their own struggling video platform, simply couldn't compete with: a community. YouTube wasn't just a place to watch videos. It was a place people lived.
The Deal
On October 9, 2006, Google announced it would acquire YouTube for $1.65 billion in Google stock. At the time, it was one of the largest acquisitions in internet history. YouTube had fewer than 70 employees, had never turned a profit, and was facing serious copyright lawsuits from major media companies. Critics called the price absurd. Many in the industry predicted Google had massively overpaid for a website built on shaky legal ground.
They were wrong.
The Aftermath
Google largely left YouTube alone after the acquisition — keeping its brand, its interface, and its culture intact. That decision proved crucial. Rather than absorbing YouTube into the Google machine, the two companies operated side by side, allowing YouTube to continue growing on its own terms. The copyright issues were eventually resolved through licensing deals with major studios and record labels, paving the way for YouTube to become a legitimate media powerhouse.
Within a decade, YouTube would be valued at well over $100 billion — making the $1.65 billion purchase price look like one of the greatest bargains in the history of business.
By the Numbers
$1.65 billion — Purchase price, paid entirely in Google stock
October 9, 2006 — Date the acquisition was announced
16 months — How old YouTube was at the time of the sale
~65 employees — YouTube's entire workforce when Google bought it
$100 billion+ — Estimated value of YouTube today