Roku shares indicators multi-year settlement with Google to maintain YouTube on the streaming platform

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A remote control from Roku Inc. in an arranged photo in Hastings-on-Hudson, New York, May 2, 2021.

Tiffany Hagler-Grear | Bloomberg | Getty Images

Roku stock rose more than 16% on Wednesday afternoon after entering a multi-year agreement with Google to keep YouTube and YouTube TV on their streaming platform.

The deal will allow Roku’s 56.4 million active accounts to continue watching YouTube and YouTube TV, Google’s live streaming service, without interruption.

Google previously threatened to divest both YouTube and YouTube TV from Roku on December 9th. The carriage fight caught the attention of Congress, which sought to contain the power of big tech companies like Google.

“We are pleased to announce that we have an agreement with Roku to continue distributing the YouTube and YouTube TV apps on Roku devices,” said Mariana De Felice, a YouTube spokeswoman. “This means that Roku customers will still have access to YouTube and that the YouTube TV app will again be available in the Roku store for both new and existing members. We look forward to a partnership from which our mutual users benefit. “

The agreement avoids a YouTube blackout, which could have resulted in significant customer churn for Roku. Competitors like Amazon Fire TV and Apple TV run YouTube.

“Roku and Google have agreed on a multi-year extension for both YouTube and YouTube TV,” Roku said in a statement. “This agreement represents a positive development for our mutual customers as both YouTube and YouTube TV are available to all streamers on the Roku platform.”

Terms of the agreement were not disclosed.

The negotiations between Roku and YouTube became controversial over both parties’ need for advertising revenue. Roku requires a percentage of the advertising inventory on every negotiated contract of carriage in order to sell it to its customers. YouTube, the second most visited website in the world, dominates streaming ads and has the popularity to back Roku’s claims. Roku claimed Google asked it to favor YouTube content over that of other providers in the company’s search results.

“For too long, the major technology platforms have used their power to favor their products and services over those of thousands of smaller online businesses,” Senator Amy Klobuchar, D-Minn., Said in a statement in support of Roku in October. “You said, ‘Just trust us’, but experience has shown that we cannot rely on these companies to act fairly in the market.”

Still, Roku has built a reputation as a difficult negotiating partner. It has made agreements with Peacock of NBCUniversal and HBO Max of WarnerMedia months after every streaming application was released.

Consider: Jim Cramer over the year

Disclosure: NBCUniversal is the parent company of NBC and CNBC.

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