There are several important messages and lessons from the Google - YouTube merger.
- Paul Kedrosky points out that Google bought a company (YouTube) where they already have a product (Google Video). NIH - Not Invented Here is usually a big problem for a proud technology driven company. This tells me they care more about winning than pride.
- Robert Scoble says sure Google will get sued, and they may lose a suit or two, but so what? They may lose a battle but win the war. Scoble points out that Microsoft did the same thing raking in billions of dollars and winning marketshare while being sued for anti-trust.
- Om Malik says FaceBook is a big winner because Yahoo, Microsoft, Fox and the other big guys will scramble to make an acquisition of their own.
- Mark Cuban still thinks Google is crazy for acquiring YouTube. Mark believes Google's deep pockets will be a big target for copyright lawsuits.
My Take? The jury is still out.
- Mergers take years to play out. Competition reacts and markets change.
- Could this deal fizzle like Broadcast.com into Yahoo, or Skype into eBay?
- Will the copyright lawyers start filing lawsuits?
- Will MySpace/Fox Interactive take on YouTube?
Building is cheaper than buying
Frankly, I am a little surprised that Google didn't put the time and effort into making Google Video a winner. Microsoft has come from behind many times and built a winning product starting from nothing.
Remember Netscape, Nintendo, iPod? Netscape invented the browser and dominated the market. Microsoft slowly built Internet Explorer into a leading browser. Nintendo was the leader in game boxes. Microsoft came out with the xBox and sustained losses for several years but ultimately built a very successful business. Microsoft is doing it again with Zune. iPod is the clear leader today, but Zune will change the market.
Microsoft has also done lots of acquisitions that turned into very successful products. Vermeer became FrontPage. ForeThought became PowerPoint. PlaceWare became LiveMeeting. There are lots of examples.
There are lots of ways to build a successful company. However, there are no guarantees with any approach. Google showed a lot of guts making this deal. Lets wait a year or two before declaring winners and losers.