The digital video compression technology of On2 can help Google to cut the costs for the video sharing site YouTube, as it can allow shrinking the files, hence making them much easier to send out to people.

During the month of August, On2 had agreed to a takeover by the Google Inc. as a result of a deal that valued at an amount of about $106 million. Later the shareholders of the company On2 had filed lawsuits against the company in New York and in Delaware, by claiming that the directors of On2 had agreed to a deal which undervalues their shares.

This was also argues by the shareholders that the deal is not giving them a significant amount of premium in return of the change in control. The lawsuits have also sought the class action status.

As with the settlement agreement, On2 has said that it has agreed to release more of the information to the shareholders. The company named Clifton Park, N.Y., had said that it had agreed to the settlement in order to minimize the litigation costs.