• CNet, Tuesday, October 6, 2009 3:45 PM

Google head Eric Schmidt is now admitting he overpaid for YouTube by, oh, $1 billion or so. And he did it under oath during his testimony before Viacom lawyers.

Schmidt estimates the video sharing site was actually worth about $600-$700 million when Google agreed to pay $1.65 billion for it in 2006. Why? To edge out the competition, he says. "They had indicated to us that they would be sold, and we believed that there would be a competing offer -- because of who Google was -- paying much more than they were worth," said Schmidt. "In the deal dynamics, the price, remember, is not set by my judgment or by financial model or discounted cash flow ... It's set by what people are willing to pay."

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