SEGMENT RISK ANALYSIS OF GOOGLE AND YOUTUBE MERGER

The main risk that emerged in the 2006 deal concerning the merger of Google with YouTube was the unprecedented technological integration, the strict compliance with legislative and regulatory authorities, and the fundamental changes in the existing competitive environment. Integrating the YouTube streaming technology with the systems of Google’s platforms was not simple as it required solid scalability and many compatibility systems which are all necessary for preserving the top quality of user experience and better operational performance. Moreover, the YouTube’s user-generated content model brought to the doorstep the copyright infringement issues plus, to look the company’s legal risks further ahead; therefore, it led to more legal expenses and reputation damage. Market risk factors further affected the environment after other companies attempted to match Google’s digital power and consequently lowered YouTube’s share. Lastly but not least, the pressure to gain financially from YouTube, not disappointing their users and not violating the privacy norms constituted the major strategic risk, influencing the final outcome and therefore the future of this merger. In addition, data privacy law evolution and evolved regulatory landscape set forth a list of challenges which need to be overcome by means of effective compliance. These factors led to a short-term confrontation between aggressive pursuit of growth opportunities and logical caution around the risk management to provide long-term benefits.