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It was no secret that Google was in talks to buy YouTube this past week since Michael Arrington shared a tip offered by an insider.  Well, it’s now official, and huge news at that.  Google has announced plans to acquire number one video sharing site YouTube for a mere $1.65 billion in a stock-to-stock transaction (meaning Google gets all of YT’s stock and YT gets $1.65 billion worth of Google stock).  Google’s General Counsel David Drummond mentioned that stock was chosen as the transaction medium so it would be tax-free for YouTube.  YouTube will slowly be sucked into the vortex known as Google until the deal is completed in the fourth quarter of this year.

According to Google’s press release on the matter, “YouTube will operate independently to preserve its successful brand and passionate community.” I’d say this is a great idea for Google so they don’t corrupt the popular site with corporate nonsense.  The only confusing part of this strategy is how Google Video fits into the picture.  As you well know, Google Video is the second most popular video sharing site (to YouTube of course).  How they plan on operating these two divisions as separate entities is beyond me.  I suppose it’s possible they’re planning on heavily integrating AdSense and their other advertising solutions into YouTube and analyzing the return.

Today, both Google and YouTube executives had a conference call to discuss the acquisition.  Included were Eric Schmidt (Google’s CEO), Larry Page (Co-Founder & President, Products), Sergey Brin (Co-Founder & President, Technology), and Chad Hurley (YouTube’s CEO).  Others were on the call, but for the sake of space and time, I’ll spare you.

For the time being, the companies will not be announcing any juicy information regarding the partnership since there are a number of regulatory things that could stop the deal from closing.  Much of the call discussed how both companies share the same vision of serving end users, and Larry Page said how YouTube’s Chad and Steve remind him so much of himself and Sergey.  Isn’t that cute?  YT’s Chad discussed the community element of the partnership as seen below:

“Our community has played a vital role in changing the way that people consume media, creating a new clip culture. By joining forces with Google, we can benefit from its global reach and technology leadership to deliver a more comprehensive entertainment experience for our users and to create new opportunities for our partners,” said Chad Hurley, CEO and Co-Founder of YouTube.  “I’m confident that with this partnership we’ll have the flexibility and resources needed to pursue our goal of building the next-generation platform for serving media worldwide.”

For details on the conference call, check out PaidContent, TechCrunch.

It doesn’t look like Google’s going to have any trouble with being number two in web video...since they’ve now got number one in their back pocket.

Read [Press Release]