So they did it. Despite the warnings of corporate lawyers and internet icons like Mark Cuban and Jason Calacanis, Google has bought YouTube for more than one billion dollars. Here’s the official announcement :

“Google announced today that it has agreed to acquire YouTube, the consumer media company for people to watch and share original videos through a Web experience, for $1.65 billion in a stock-for-stock transaction. Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community. […]”

It should be said that Jason has since come round and now applauds Google’s move, largely, he says, because Google is the only bigco that could make it work.

We shall see.

Mike Arrington of TechCrunch is reporting that a rumour is circulating that Google may buy Youtube for around $1.6 billion.

“A quick phone call to a VC confirmed that the rumor is circulating (he also confirmed the price), but that is far from confirmation that this deal is happening. I’m digging for more but the source on this one is very good.”

His counter-intuitive point is that Google won’t be put off by the many irrate copyright holders whose rights have been breached by YouTube — they are now trying to strike deals with the owners.

Of course, Google would have to add the legal costs of these defences to the $1.6bn price of the property. Is that a good idea?

Arrington thinks it’s about 40pc likely. Time will tell.

Eric Schmidt has been interviewed for Time Magazine and goes into some detail on partnerships, particularly for Google, which has a very narrow base of operation for such a large company. “… we tried to pick partners that represented different initiatives that we wanted to work with for a long time.”

It’s in the secondary growth period that the need for new talent becomes irresistible :

“I think that to some degree when you’re a small company you sort of have to do everything yourself, and as you get more established you begin to realize you’ll never get everything done by yourself. You’re fundamentally going to be a better player, a better solution, if you can share in the success, and get the benefit of the hard work these other people have done.”

Essentially, Schmidt recognizes that it’s a matter of distribution, of reach towards new customers. “In most cases what I’m describing is distribution: they have a way of reaching customers that we do not on our own. And also the combination solves a new problem.”

Finance is not the central issue here, as it is with venture capitalists : “So it wasn’t particularly financial, although the financials are all good in these deals, it was really more reach; distribution. It was really strategic. My point is you don’t just do partnerships to do partnerships. You do partnerships for a reason.”

Hitwise has compiled “the volume of searches executed on the top search engines”, defined as 57 search engines used by U.S. internet users during a four week period.

The table above shows the top three engines Google, Yahoo! Search and MSN Search for the four weeks ending July 29, 2006.

Taken together with the recent spectacular financial results, is there anyone who can stop the onward march of Google?