Google has purchased YouTube, a video distribution website, for $1.65 billion in Google stock. I don't like this deal at all, even though many investors seem to be very excited about it.

YouTube relies on user-created content. All videos on their site are available for free. So far, the only money they've made is from advertising revenue, which has not been that much. The site loses millions of dollars every month.

What's even worse for YouTube is the content of the videos. Most of the videos are copyrighted, and the copyright holders are usually not the people posting them on the website. That opens up the strong possibility of lawsuits from people who don't want the videos they created to be offered for free on the internet.

YouTube has not been sued thus far, most likely because the company had very little money to show for their efforts. Now that Google - one of the biggest companies in the world - owns YouTube, you can be sure people are going to be taking the internet giant to court for a huge chunk of change.
Google Press Center: Press Release