Understanding the psychology of business always comes down to the consideration of two things- time and money.
Both are precious, finite and interchangeable. In business (as in life), there never seems enough of either.
But we most choose between them. So most corporations.
Technology giants often have money to burn, but the breakneck speed at which technology evolves assures that even the largest, richest and most powerful company cannot afford to waste time- if it does, it will not remain large, rich or powerful for very long. Ask AOL.
The great thing about all manner of financial machinations is that they are always so predictable- whatever is cheapest (simplest and fastest) will always be done. There are few, if any exceptions to this, the golden rule of capitalism.
Time is the most precious resource of all, and it is the one thing that those who can afford it will always buy. That is what a technology acquisition is- an purchase of time.
Google bought youtube for one reason- they could afford it. That's it. Its as simple as that.
Sure, it cost them 1.7 billion dollars, but that is an excellent price for the rarest commodity in existence.
Now Google doesn't have to spend enormous amounts of time and money developing, testing, patenting and marketing a rival technology to attempt to compete with a well-known giant that completely dominates a major technology market. The acquisition of youtube virtually eliminates the need for these resources, not to mention the significant risks of mobilizing them. Success is by no means a sure thing. But an acquisition is, or at least is the closest thing to it.
1.7 billion dollars is a lot of money. But perhaps not that much to Google, which, as I have already said, has money to burn.
The relatively affordable, low-risk acquisition of a major new market powerhouse assures that, sometime in the future, Google will be able to burn even more.
And isn't having enough money to burn what we all want anyway?