MEMORANDUM TO: Isin Guler FROM: Josh Kahn DATE: October 27, 2008 RE: Assignment #2: Horizontal Diversification The purpose of this memo is to evaluate the diversification decision of Google to acquire YouTube in 2006. Horizontal Diversification Google’s acquisition of YouTube in 2006 was an effort by Google, the internet’s largest search engine, to expand its scope to online video-sharing. In 2006, Google operated a “massive online ad system, which handled ads from hundreds of thousands of advertisers 1 .” YouTube was the most rapidly growing online-video site, but had not turned a profit in its first two years. The diversification effort was initiated through a $1.65 billion all-stock deal in October of 2006. At the time of the deal the logistics for any consolidation between the two companies were pretty ambiguous—Google had its own fledgling video service. However, Google had plans to replace its video section of its search engine with YouTube, and was considering alternate ways to
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This document was uploaded on 11/04/2011 for the course BUSI 471 at UNC.