Will Google buy all of Web 2.0?

So...the long running rumours of Google buying YouTube seem to be coming out of the closet, the Wall Street Journal reported today that a price of $1.6bn (about 1/2 way between the highest and lowest rumoured prices going round) was the latest estimate.

Hmmmmm.....if you can't beat them, buy them?

Google are in good company, seems all the Old Media and New Media guys are buying New New Media companies, though one has to ask how many YouTubes (or Skypes or MySpaces) one could build at these prices.

The thing about Google that I do not understand is that, in theory, they should be able to build this stuff. Or, do what many have done in uncertain times - partner. What is going on - why pay top dollar for a startup?

The Economist today reports on Google's "formidable recuitment machine" scouring the planet for the best and brightest. Yet, at the same time, Eric Schmidt (Google CEO) told the UK Conservative party that about 10% of the company is aimed at blue skies, the rest are doing the same old same old.

So, has innovation flown the coop? Is the real aim is to take out a scary competitor asap, one that evaded the "early buys" radar and grew too fast. Is buying YouTube the Bunker Hunt approach to Web 2.0 - buy it all up before it threatens to break out (and maybe break you)? Every Tech wave produces a behemoth......IBM, Microsoft...now Google, who can exercise such incredible market power.

We haven't had a Netscape Moment this time around (yet), where the existing incumbent crushes the new guy with its market power, but this is a similar sort of defining point I think.

If it happens of course...it is only a rumour after all