Would Google Acquire Groupon For Tech, Talent Or Market Share?
- by Laurie Sullivan @lauriesullivan, November 29, 2010
Chatter of Google acquiring Groupon lit the Internet ablaze Monday, as speculation grew that the two had tied the knot. Reports of an acquisition initially surfaced last week by All Things Digital, citing unnamed sources, followed by VatorNews with more of the same. None of the reports suggesting a done deal have been confirmed by named sources, and Google, of course, doesn't comment on rumor or speculation.
Google's introduction of boutiques.com last week was another salvo in the battle for the social graph, according to Lou Kerner, analyst at Wedbush Securities. The move would bolster Google's position in local and put it in a better position to do battle with Facebook. Groupon, which rides on the notion of co-op buying power, offers members daily deals in the city they live -- typically 40% to 70% off restaurants, spa or tourist attractions.
In a report published Monday, Kerner explains that Groupon remains one of the fastest-growing companies in history, reaching a $500 million run rate just two years after launch. But government approval will become one of the biggest hurdles that Google will face if the acquisition proves real. "The regulatory issues will be significant, as would most any significant Google purchase," Kerner tells MediaPost.
The deal, priced between $2 billion and $3 billion, would become Google's largest acquisition since the purchase in 2008 of online ad company DoubleClick for about $3 billion. It also could close out the year high for the Mountain View, Calif. company that has been steadily acquiring companies throughout the year.
Social and local deals for businesses will become the focus for online advertisers in 2011. Location-based services and data supported by Google Preview all point to mapping services and instant gratification for consumers when searching for products and services online.
Companies typically acquire for talent, technology and customers that move them into a market they have yet to penetrate. Which do you think?
$2.5B for "talent" or "technology"? I don't think so.
No one would do that deal. Not even Google ( regardless of what they maybe paying for engineers).
Groupon owns this market. Now Gooogle will.
I think you're correct Josh. They will move into the market and build a stronger platform for mobile aimed at supporting local companies.
Groupon may own the market for now while there still is a market. The market depends upon enough local businesses offering a substantial discount. Already, there have been many incidents of non-fulfillable certificates. When a large company such as Google gets their hands on local focals what can very easily happen is that to sell more businesses on the concept can lower the offers' value - 20% off, 10% off - with high turn over of participating businesses and salesforce and dimishes customer purchases. So unless, the big guns see such a need for this tech they cannot get anywhere else, then there is a busted business call in the making. Talent is fleeting.