A startup that began life in a garage has just been bought for $US1.65 billion by a startup that began life in a garage.

Google today acquired the video-sharing website YouTube, making instant multi-millionaires of Chad Hurley and Steve Chen, who started the site less than two years ago with the aim of sharing dinner party footage with friends.

The purchase, which makes Rupert Murdoch’s $US580 million for MySpace look modest, is a recognition of the online video revolution from the word-search masters.

Today, visitors check out more than 100 million video clips on the site every day. And today YouTube enters the annals of companies that have gone from garage to gargantuan.

Silicon Valley is steeped in the “mythology of the garage” —  that it’s “a couple of folks holed up in a garage that are making everything work”, says Geoffrey Bowker, executive director of Santa Clara University’s Center for Science, Technology and Society in The San Francisco Chronicle.

The Palo Alto garage where computer maker Hewlett-Packard Co started out in 1939 is now considered the “birthplace of Silicon Valley”. And it’s well documented that Steve Jobs and Steve Wozniak of Apple Computer Inc “spent some of their formative time in similar surroundings in the 1970s”, writes Verne Kopytoff in The Chronicle.

Before acquiring YouTube, Larry Page and Sergey Brin made another purchase: the home of the two-car garage where Google began life in the late 1990s.

As for the wisdom of their latest pet project, it’s hard not to believe that the internet’s Midas men will perform their usual alchemy on YouTube.

But the site is not without challenges, many of them from copyright lawyers who’ll be only too happy to get access to Google’s deep pockets.  

Universal, the world’s largest record label, has made friends with YouTube since threatening legal action last month. This week it reversed its position and joined CBS and Sony BMG in partnering with the site, says The Guardian. It’s a sign that YouTube is “gaining increasing legitimacy with media organisations”.  

Still, the copyright situation “needs to be solved,” said Josh Bernoff of Forrester Research. “In the absence of a solution to that, Google has just opened itself up to a huge lawsuit.”

Peter Fray

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