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.
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.
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?
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.
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.
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.
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.
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.
> He said YouTube Premium - its service letting users pay to remove ads between videos, or songs on its music service - had helped boost paid subscriptions across Google consumer services to more than 325 million in 2025 overall.
Out of the 60bn they made only 325 ml from paid subscribers. The title made it like it was an important figure. There's also no YOY numbers or profit so it's difficult to draw a conclusion.
And still no information about how much of the subscription revenue is shared with the content creators. Feels like YouTube is dumping all the money to shorts and other creative accounting, and giving nothing to the creators.
Recently a significant percentage of the folks I follow stopped making videos.
> The figure, which totals the money generated through advertising on YouTube as well as paid subscriptions, far surpasses streaming rival Netflix's $45bn revenue.
I wonder if this is a fair comparison, though. It strikes me that Netflix’ revenue model is simpler and their costs are also lower, but I guess we won’t know YouTube’s costs any time soon.
> He said YouTube Premium - its service letting users pay to remove ads between videos, or songs on its music service - had helped boost paid subscriptions across Google consumer services to more than 325 million in 2025 overall.
325 million people that don't know about Firefox and uBlock Origin?
I pay for YouTube premium and it’s one of my happiest expenditures. YouTube is a miraculous, unbelievable treasure trove. Learn any language, any musical instrument, any academic subject. TV clips from the 80s that someone taped in VHS for some reason. Isaac Arthur, Veritaseum, numberphile. I’ve gotten more value from YouTube than any other single site on the internet, and it’s not close!
I want to use it on my Apple TV and don’t want to fiddle around with VPNs. It’s the only streaming service I pay for and I’m happily doing it. It also pays creators I’m watching which is a nice feel-good benefit.
It is very amusing to read HN comments that complain about the "enshittification" of free platforms while simultaneously mocking those who would pay for stuff they like. YT is dollar for dollar the best digital subscription I pay for and I pay it gladly.
I don't think one should mock people who are paying for youtube. If they find it's good, then it's laudable to pay for it. But that said, I personally can't relate to that position. There just isn't any content on youtube that I find interesting enough that I would pay for it. It's a time waster for me, not something I seek out because it's a compelling way to spend my time.
Youtube has reached the terminal stage of enshittification:
• the good stuff is VHS-quality TV content that somebody pirated
• the ads, once nonexistent, are typically disreputable and now incessant
• the few 'creators' worth watching are lost in an ocean of audience-captured, brain-dead garbage "hey guys... [product placement disguised as organic content]... misinformation... remember to like and subscribe... [product placement disguised as organic content]"
• access becomes increasingly arcane due to ad-blocking measures
• one of the lowest quality comments sections - largely inorganic, rogue state-sponsored - on the internet
• increasingly just AI slop
The day I can't scrape videos via yt-dlp is last day I permit youtube domains on my network. Personally, I would prefer to eat a rotten cat carcass than pay a single cent to Youtube.
In a better world, youtube would be some kind of a protocol, not a mediocre company serving as a middleman.
i am a subscriber as firefox + ublock origin does not work on phone (on android, i think? last time i checked) and neither on smart tvs (mine is rokutv)
NewPipe and IronFox (hardened Firefox) for Android, although I suspect these need to be "sideloaded" as Google won't allow them on the Play Store. (I run Graphene so this does not apply to me.)
For the TV, I would suggest VacuumTube (a frontend to the Leanback interface) on a free/libre box running Linux.
Firefox and ublock origin won't help you play music in the background on your iphone while using another app......tons of other situations like that. Think a bit more instead of wasting peoples time with pointless and braindead comments please. I say this as an android/linux user.
YouTube is replacing my Netflix now, honestly. But I am not happy it being just an algo game, so I am building tubeandchill.com to find good creators, get video tips by newsletter, and more... (tell me what you want to see there, please).
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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.
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?
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 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.
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.
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Absurd? YT was acquired for 1.5 billion USD back in 2005 / 2006. (Google was already a billioncompany back then)
I tell you one thing: They are sitting in the basement each evening, counting the cash and laughing their ass off :-D :-D
Guaranteed :-)
This was by far one of the most strategic decissions they ever made.
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.
Out of the 60bn they made only 325 ml from paid subscribers. The title made it like it was an important figure. There's also no YOY numbers or profit so it's difficult to draw a conclusion.
[1] https://outlierkit.com/resources/youtube-60-billion-revenue/
Recently a significant percentage of the folks I follow stopped making videos.
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I wonder if this is a fair comparison, though. It strikes me that Netflix’ revenue model is simpler and their costs are also lower, but I guess we won’t know YouTube’s costs any time soon.
Netflix's content pipeline is hella expensive, due to their being boycotted by major content owners (like disney).
So i would imagine that youtube's revenue model is more efficient and thus generate a higher return than netflix's.
[1]: https://en.wikipedia.org/wiki/Open_Connect
500 hours of video getting uploaded a min plus processing costs (including AI) for no upfront $$s. Far simpler CDN optimization
How so? Netflix has to license or produce all their content.
325 million people that don't know about Firefox and uBlock Origin?
So yeah, take my $13.99/month
Youtube is just profiting from it, by shoving mostly shitty ads in your face.
Just because it was the first one to gain traction..
• the good stuff is VHS-quality TV content that somebody pirated
• the ads, once nonexistent, are typically disreputable and now incessant
• the few 'creators' worth watching are lost in an ocean of audience-captured, brain-dead garbage "hey guys... [product placement disguised as organic content]... misinformation... remember to like and subscribe... [product placement disguised as organic content]"
• access becomes increasingly arcane due to ad-blocking measures
• one of the lowest quality comments sections - largely inorganic, rogue state-sponsored - on the internet
• increasingly just AI slop
The day I can't scrape videos via yt-dlp is last day I permit youtube domains on my network. Personally, I would prefer to eat a rotten cat carcass than pay a single cent to Youtube.
In a better world, youtube would be some kind of a protocol, not a mediocre company serving as a middleman.
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For the TV, I would suggest VacuumTube (a frontend to the Leanback interface) on a free/libre box running Linux.
It works on Android and PC.
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