YouTube’s issue wasn’t just being sued, the storage and bandwidth costs are huge and YouTube was losing billions. Rumors are that YouTube is still not profitable.
YouTube took years and only became slightly profitable after burning through billions of Google’s money and then only by piggybacking off of Google’s existing infrastructure and ad network.
Price dumping is a bigger deal when it's a company in a monopoly position doing it. It's not necessarily anti competitive to sell at below cost.
YouTube could have been profitable by charging for their services. Like Vimeo. They could not have been profitable with ads. Google couldn't afford for YouTube to be small, they needed a near monopoly on internet video to extend their ad empire.
>YouTube could have been profitable by charging for their services. Like Vimeo.
Fyi, Vimeo was a money-losing business when IAC bought it 2006 and is still unprofitable after IAC spun it out as a public company in May 2021.
So it's not convincing that Youtube could have stayed independent and become profitable by charging for videos. Before the Google acquisition, Youtube was also threatened by the billion dollar Viacom lawsuit. The young Youtube startup didn't have the money to fight expensive legal battles like that and could realistically lose in court like Napster lost against the RIAA lawsuit.
Youtube getting acquired by Google got the video startup out of several fires: (1) switch to Google's datacenter infrastructure which reduces operating costs (2) tap into Google's extensive ad network to monetize (3) use Google's army of lawyers to settle with Viacom by convincing them that the ContentID fingerprinting algorithm will filter out piracy.
Google over-leveraged advertising on Youtube however. Most Youtube viewers use an adblocker on PC, and adblock is becoming more common on Android with each passing month. All because AdSense went with a more lax policy of moderation for ads after the 2017 fallout caused by Matt Watson scared away big advertisers like Frito-Lay and Toyota. The result was all ads were either falsely advertised Android games, multi-level marketing scams, or even nakedly racist political ads in the runup to the 2018 congressional elections. Adblock rates exploded, cutting Youtube's income and causing a panic response of running even more ads and locking users into seeing them. To this day Youtube still has a lax vetting policy for advertising partners, and actively hateful, harmful, or overtly false ads stay up for weeks until enough users report them.
As for subscriptions... Well, they tried that with Youtube Red. And then Youtube Premium. And then Youtube Music. Every time people turned it down, because the benefits weren't worth the cost each month considering all the features touted could be found legally for free elsewhere. And when video creators outed Red by showing they'd get a paltry amount of that revenue, despite Youtube saying the money from subscriptions would be used to pay them, even more of the viewing audience turned against it.
When you're in the uniquely precarious position of hosting high cost user-generated content, it's very easy for outside forces to break you over their knee and send you into a death spiral.