Google Buys YouTube for $1.65 Billion

Google agreed to buy closely-held YouTube in an all-stock deal worth about $1.65 billion, its largest acquisition to date. The terms state that YouTube will initially retain a significant measure of independence, keeping its current brand, offices, and employees. The transaction is expected to close in the fourth quarter.

Google CEO Eric Schmidt mentioned that YouTube co-founders Chad Hurley and Steve Chen, twentysomethings who built the winning site with a huge following under the noses of richer, better-known competition, reminded him of Google founders Sergey Brin and Larry Page. Brin even said YouTube is similar to the Google of “just a few short years ago.”

Sounds like a match made in heaven… Though everyone is wondering 1) what exactly will happen to Google Video, 2) how exactly Google will take advantage of the company, and 3) how will Google fix all the legal issues.