Google to shake up online video with On2 acquisition

Google has announced a $106.5m deal to acquire loss-making video compression firm On2.

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.

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