I remember thinking Google paid an absurd and ridiculous sum of money when they acquired YouTube. I couldn’t have been more wrong, what an incredible acquisition.
I remember thinking Google paid an absurd and ridiculous sum of money when they acquired YouTube. I couldn’t have been more wrong, what an incredible acquisition.
Just like with FB’s purchase of Instagram. I remember people making fun of Zuckerberg for paying $1B for a “filter app than can be made in few hours”.
I think the magic wasn’t in those apps or websites but the traction they got and how that was preserved. Both FB and Google were very careful to preserve the origins when evolving.
I remember Google videos, it was very bad. If this wasn’t Google but Microsoft, they may have tried to integrate Youtube into their Video platform and destroy everything.
Being good custodian is just as important.
Yeah, he was buying market share. Google was buying advertising potential and market share. The largest video streaming platform on the planet, still not a silly buy.
At the time YouTube was acquired their infrastructure costs were quite high. Not as crazy as today's AI companies, but in the same way a lot of people were questioning if they could ever make money because of it.
The Youtube acquisition and growth strategy was interesting (I left another comment about this). IG was also quite interesting.
Many here will be familiar with how the founders of these tech companies basically keep control over their companies while holding minority stakes through different classes of shares. Zuckerberg was the only one to hold these shares I believe and could basically authorize the IG purchase by himself. And that's what he did. He told the board after the fact. At least that's the story I read.
IG was growing fast but it blossomed under FB's stewardship in a way that I'm not sure it would've had it stayed independent or someone else had bought it. For many years, IG was allowed to operate semi-autonomously within FB (kinda similar to Youtube under Google actually). They continue to have their own tech stack, which has caused its fair share of problems, and essentially operated seprately from a product perspective.
But scaling requires a whole bunch of infrastructure that isn't all technical. Things like site safety, taking down problematic content, creating an ads ecosystem and so on. FB had a lot of expertise and existing infrastructure for all of this because of, well, Facebook. And whatever fauts FB has, this is something they did very well.
I totally think Google would've screwed it up, for example.
I guess my point is that they didn't exactly buy a $100B+ business for $1B. They turned it into a $100B+ business. Just like Youtube.
That being said, I think IG has actually faltered from a product perspective over the last 5+ years. Reels (like Youtube Shorts) are a kneejerk reaction to Tiktok, who is eating both of them alive in short-form video. And Tiktok's recommendation algorithms are a step above of anything I've seen on FB, IG or Youtube.
I was never a big IG user but from what I hear from people who are or were and what I read online, it feels like IG has kinda lost its way and nobody really knows what it's for anymore. It's certainly not for sharing among your friends (which is how FB started too). Photo-sharing seems to be falling away to video. So who exactly is it for?
> Tiktok's recommendation algorithms are a step above of anything I've seen on FB, IG or Youtube.
That's because their main UI isn't anything like Tik Tok. You start out with a normal feed on IG, on YouTube you might see recommended videos, but its not BAM HERES SHORT FORM. Tik Tok was by design this UI and recommendation scheme. I think its a UX issue not an algorithm issue necessarily. If I open YouTube shorts I get a lot of the content I keep going back on YouTube to watch, on IG probably not since I dont use FB or IG much if at all. If these UIs were more prominent, I could see them matching or competing with Tik Tok on these fronts.
What's funny to me is Tik Tok users quitting Tik Tok because they think the US has poisoned it, and then running to YouTube or reddit. Look on r/tiktok sometime, I have been checking on it anytime Tik Tok has 'drama' and it never disappoints.
I agree that the UX on Tiktok is cleaner and, like you say, in part part that's due to it being only short-form. It's worth noting that "short form" here means up to ~10 minutes long at this point, includes live videos and also includes photo galleries.
But it's more than that.
When I started using Tiktok, Charli D'Amelio was the biggest creator I believe and not once did I ever see one of her videos. I'm just not in that demographic. I've had repeated experiences on Tiktok where I'd see a new creator and see they have like 17M followers and I'd think "how have I never heard of them before?"
The way I describe this is that Tiktok's content is effectively segmented and isn't "global". By "global" I mean if someone is a top creator on IG or FB or Twitter, you'll see them. The platform will push them out to you and Tiktok is just more sophisticated than that.
The second big difference is the responsiveness. It takes other platforms longer to learn. Maybe they've gotten better now but, from what I know, historically other platforms had daily jobs that updated user recommendation preferences based on your activity. So if I started watching a lot of gaming videos, this wouldn't be reflected in my feed until the next day. Tiktok I think was the first to have a truly real-time updating feed.
Now this isn't a straight real-time vs overnight situation. It is/was more hybrid than that. So in FB's case, recommendations were more real-time but updating your preferences wasn't.
Inventory.
Insta was tapping out of how much content (and therefore ads) they could show a user. They could either find new content to show or add more ads per unit of content. There are only so many friends, who only take so many photos. Social media stopped being “social” because it just wasn’t as good of a business as generic media. There are endless influencers and videos is way more engaging. Influencer content is semi-professional content and is way better made and way more engaging than your family who posts only at big events. Meta is very data driven, and they understand exactly how reels is increasing duration of app sessions - which means more ads.
YouTube is close to losing that preservation. It's so slow and clunky to load in the desktop browser that I'm finding myself using it a lot less. It's absurd how heavy it is now.
UX is getting worse too, e.g. the save to list dialog closing after adding to a single list instead of allowing multiple to be selected. It wouldn't be so bad if it didn't take forever to open.
A few things I can’t stand about Youtube’s desktop website:
1) Spacebar sometimes skips to the next video when playing a playlist. Just why?
2) You never know if the small buttons like play next on the thumbnails will work or just play that video right away.
2) when on the homepage, you open a few videos in new tabs and close the homepage only to find out that you just open bunch of “this video contains paid promotion” disclaimer pages. Re-open the homepage to actually open the videos and they are all gone, the page shows a grid of different videos.
so yes, I agree that the web interface went downhill.
glad it’s not just me. we used to have multi-playlist saves with a modal that showed more than three pixels of your library. now it’s slow, cramped, and forces you to hit SAVE over and over even though the backend supports it. feels like a regression dressed up as bad UX.
I am using it less because I can't find any videos as the search is completely broken (no, I won't enable history tracking). Many days when I am in the mood to watch videos, I just give up. It doesn't help now that most searches return AI-generated video (that has millions of views). Who watches these things?
For a lot of the early years, it lost a lot of money. Providing the bandwidth, getting distribution closer to the ISPs etc was a major investment. Lots of dark fiber.
A bit like Google Maps though, a great visionary early investment that they then poured a lot of $ into to make them what they are today. No one else was just providing free satellite imagery for the entire world back then, not even Google Maps.
The investments to support these two products at least, have been really important in helping Google maintain its hold in other places too.
Lots of people still whinge about youtube, but standing up a solid competitor would take too many $ for anyone but other big tech now.
To be fair, goog has been investing heavily in youtube for ~20 years, and executing pretty well overall, it wasn't a foregone conclusion.
Which certainly raises the question: are they in fact making money overall on youtube? Considering not just the initial acquisition cost, but also the further investment they put in over the years. I'm not sure how one would find out, but it isn't the slam dunk obvious case that the OP was implying.
> are they in fact making money overall on youtube?
if they weren't, won't it make sense to drop it? So by empirical observation of the outcome, it seems like youtube produces enough value to google that it is worth the investment!
Now if you ask whether youtube is financially net-positive; ala, if youtube were to be spun off as an individual/separate entity without being owned by google, then that's another question altogether. I have doubts it is financially net-positive without the leverage that google provides in utilizing youtube's assets.
If I remember correctly it wasn't even making any remarkable money in the past.
Post-acquisition, Google employees made a number of smart moves with good execution, including a viable comp model for the creators and music rights deals. Several moves I consider bad as well, but the good moves outweigh them.
Looking back, I’m still pretty amazed they got so much of it right. Which is to say, a good chunk of the value wasn’t in the value of YouTube itself but in what Google brought to the table _or_ a synergy between the two.
I’m not sure how true it is but I remember reading the story where Google saw YouTube as the better choice because those guys are down the road, against their other competitors that they were trying to buy.
Yes, but how much of that success was driven by access to Google infra, adtech, and cash?
Yeah don't worry you were in a crowd of 99% of people that thought the same thing.
Another acquisition, arguably even better, is Instagram. Most people got that wrong too.
Even WhatsApp.. that number was insane...
Not sure if WhatsApp paid off, though. There are reports of up to $1 billion in annual revenue with the Business API, so this is far less than what they paid. I think Meta's strategy was to create a Western version of WeChat, which has a very high ARPU, but for some reason, they never invested in it properly... They added Stories, a "Venmo" feature, and then gave up.
I think that's an example of the opposite, the number was huge but how much revenue is being driven by WhatsApp? I think that would be a hard one to put a number on. I'm sure it's important for Meta overall, but it's not directly driving ad or subscription revenue.
That's the weird thing about WhatsApp though.. back when they bought WhatsApp it was still a paid service and a lot of people actually paid for it and it was on its way to get to a billion active users.
After that acquisition, they made it free for all and started chasing the $$$ with WhatsApp for business. And ads. No idea which is more profitable anymore. I think they'd still be able to monetize it more with WhatsApp payments and those ads in status updates. I'd definitely like to know what the numbers are looking like these days..
> it was still a paid service and a lot of people actually paid for it
It was, but it was very cheap (UK pricing was £1 a year), and I believe had lots of free users anyway. My guess is that the revenue wasn't worth pursuing.
> the number was huge but how much revenue is being driven by WhatsApp?
Meta isn't a charity. If they aren't making money off WhatsApp outright, the users are the value and they're making money off them some other way, encryption be damned.
Whatsapp claims to be E2E encryption, but it can still submit anonymous("") metadata("") At least they can identify you and your contacts by real phone number, real name and nicknames, and more often than not real pictures; the information can be crosschecked across all your contacts who in good faith provide good information.
There are also bussiness accounts which are really important depending on the location.
It is very hard to put a price to that, but its value is undisputable.
This is exactly my point. I'm sure there's lots of intelligence that Meta can attribute value to, in a complex attribution process, but I doubt that it's as simple as a revenue stream or P&L.
Meta gets to spy on the communication habits and networks of half of the planet through Whatsapp. Since Meta is essentially a mass surveillance company, the acquisition makes a lot of sense.
The story of this is actually pretty interesting. Everyone had been tryign to do video-on-demand and failing, basically. Including Google. Google had a product called Google Video that failed pretty spectacularly.
Youtube came along and was basically spending money like there was no tomorrow. Well, for the time. It's nothing compared to the current crop of AI companies. So with Youtube, everybody was terrified of the bandwidth costs, with good reason. The cost to build a sufficient network was exorbitant using off-the-shelf hardware.
Google runs their own networking hardware and servers at the efficiency level at the time that was unprecedented. They measure things in a unit called PUE (power unit effectiveness). That's basically how many Watts each Watt of computing power cost. Things like cooling would eat that up. Typical data centers at the time were at like 1.5-2. Google's own data centers were more like 1.1. Google was actually lying and saying it was 1.2 and people didn't believe it was that low. The best Google data centers are I believe more like 1.05-1.08 now. Passing cooling and that sort of thing contributes to this.
So Google of anyone had the cost controls on computing power and and networking like nobody else. And Youtube was burning VC cash. That's why they got it so "cheap".
This still created huge problems for Google and as Youtube continued to grow it was heavily impacting national ISPs, peering connections and the like. When Youtube was acquired they came up with a bandaid solution (called Bandaid) where they bought commercial server racks from Dell and elsewhere and loaded their own software on them. They would give them to big ISPs. The software would locally cache the most popular Youtube videos to cut on the ISP's bandwidth costs and the latency. I believe that this temporary solution became permanent and continues to this day.
Nobody could monetize Youtube like Google either as in nobody else has a remotely comparable ad infrastructure and ecosystem.
And lastly, nobody could encode video like Google could. Nobody else had access to that much computing power and could use it as efficiently. That was a huge deal because the encoding requirements are massive.
So yes, it was an amazing acquisition but I think if anyone else at the time bought it, they would've failed.