Dave Tansley, technology partner at Deloitte, comments:

"Google's acquisition of YouTube is a significant strategic move to bolster its presence in the internet video business, and an opportunity to apply its expertise in monetising content searches to a platform that only took off under 18 months ago. YouTube has created a global brand and mindshare in this space, which makes it an attractive acquisition target.

"The internet video space is the likely target for the next series of media M&A activity and partnership announcements, with traditional and new entrants in the media sector all trying to get a piece of the action. One such example is the recent announcement of Microsoft partnering with Blinkx, the video search engine, to use their technology to power video search on some parts of its MSN Internets sites and Live.com.

"Video content is seen as a key route to accessing young internet audiences, which hold the promise of providing:

• High-usage customers;
• Audiences which are easy to segment and present to potential advertisers;
• Additional revenue streams with the evolution of a paid-for search model;
• The potential to sell in secondary products, like VoIP and storage facilities;
• Additional branding and profile opportunities;
• Finally, a defensive play against other media and technology companies looking to get a share of this space.

"The primary concern of any media companies looking at make an acquisition of this type is likely to be over the legality of content on the site and potential liabilities for breaching copyright. However YouTube has been successfully striking licensing deals with Warner, Universal, Sony BMG, and CBS, which arguable should overcome any of these concerns, as would the view that Safe Harbour provisions that protect ISPs and which could be applied to YouTube.

"A Google/ YouTube combination is likely to be viewed as a natural fit from a cultural perspective. Google's roots are similar to YouTube’s - its reputation growing largely by word of mouth and there are synergies for two companies which both grew so quickly.

"Video management is fast becoming a commodity on the web with many social networking sites themselves now offering video uploading facilities. The challenge for the Google/ YouTube combination will be how they compete with the 'stickiness' of these sites."

- ENDS -

Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.

Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.

The information contained in this press release is correct at the time of going to press.