Google has announced a $106.5m deal to acquire loss-making
video compression firm On2.
Analysts say the deal could shake up technology platforms that
stream web video, according to the
Financial Times.
On2's technology is considered to be among the best of its kind,
and customers include Skype, Sony and Sun Microsystems.
Google is expected to integrate On2's technology into its Chrome
browser to eliminate the need for plug-ins for Adobe's Flash and
Microsoft's Silverlight.
The acquisition will also increase Google's growing competition
with Microsoft in the client software arena as well as opening up
competition with Adobe.
Google is expected to use On2's technology to improve the video
quality on YouTube, which Google acquired for $1.65bn in 2007.
Despite the internal benefits of On2's technology, Google may
also open source the technology.
"We think that video-compression technology should be a part of
the web platform," Google said in a
blog post.
Google said the deal is expected to close before the end of the
year, but it is stil subject to approval by On2 Technologies'
stockholders and review by regulatory authorities.