Are Google's and Yahoo's Video Acquisitions Similar?
The recent Google purchase of YouTube further validates the Web2 Corp business model of integrated web products. The company warns that acquisition is no substitute for ground-up integrated development. Last week Google froze new product development and comments by its CEO, Eric Schmidt indicated that integration as an afterthought is not working for the Company. Schmidt ordered new products to be rolled into existing product lines as "features", a tricky proposition that can result in a band-aid look, feel and functionality. This week we find Google spending $1.65 billion to acquire YouTube, the aggregator of video clips submitted by users and dominated by "Jackass" style juvenile works that step all over copyright laws. While there is talk of Google becoming the equivalent of a television network over the Internet, Web2 Corp sees Broadcast.com-Yahoo and AOL-Time Warner all over again.
"Anyone can add YouTube's functionality today for very little investment", says William Mobley, Chairman and CEO. "Google's acquisition of a property that likely overlaps a significant proportion of its existing user base is troubling". Mobley dismisses Google's ambitions to bring a new form of television distribution to the market. "They have now convoluted the process of advertising to a point where the average Internet advertiser has no clue of what they are really getting. Add this to an increasing click-fraud problem and Google is ripe to be disrupted by a simplified low-price advertising model. Google is built on a sandy foundation that can be easily washed away. A competitor who can lower ad prices will inflict serious damage to them. They are not as secure as people would think", says Mobley.
Mobley finds irony in one other party's criticism of Google. "Broadcast.com's acquisition by Yahoo back in the 1999 boom period is a very similar situation to Google's current purchase of YouTube. Something tells me that Yahoo would like to have the money it paid for Broadcast.com back in the bank", says Mobley. "Now you have former Broadcast.com Founder Mark Cuban calling buyers of YouTube idiots... how the world does turn"...
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