Yahoo to Google: what you paid for YouTube is "still crazy"By Emil Protalinski 12 comments
Speaking on a panel at the Global Technology Symposium in Menlo Park on Friday, Steven Mitzenmacher, Senior Director of Corporate Development at Yahoo, took a swipe at Google while discussing acquisitions. First he said that his company went through a couple of years where acquisitions weren't on the agenda but then he added that Yahoo was "gearing up for a very big year" and that "we've come out now...guns blazing," adding that executives around the company "want to do more."
That being said, Mitzenmacher believes that Yahoo's biggest competitor, Google, is spending way too much on acquisitions. Specifically, he takes issue with how much the search giant paid for YouTube, according to The Wall Street Journal:
Mr. Mitzenmacher, who was on a panel with deal executives from Google, LinkedIn and Adobe Systems, took a swipe at Google's 2006 purchase of YouTube for $1.6 billion, saying the price is "still crazy."
Sitting next to him, Google's Neeraj Arora dismissed the notion, saying YouTube "has paid itself back."
Mr. Mitzenmacher then pulled out a phone to look up a news report from last year in which Google CEO Eric Schmidt said the site wasn't yet profitable. Users upload 35 hours of video to the site every minute, making it costly to maintain.
In November 2006, Google bought YouTube for $1.65 billion. Two years later, Google CEO Eric Schmidt admitted the company paid a $1 billion premium for the video sharing site. "I believe YouTube was worth somewhere around $600 million to $700 million," he said in May 2009.
Four months ago, we learned that YouTube was seeing 35 hours of video uploaded every minute. The costs for running the site continue to grow, so it's really not surprising that Google still hasn't made back all of the money it has invested in the site.
Google is still working hard on improving the service, and even makes other acquisitions to do so. Most recently, the Mountain View acquired Green Parrot Pictures so that it can integrate tools that help make videos look better, reduce required bandwidth, and improve playback speed. YouTube also recently revealed that it plans to grow its staff by 30 percent this year.