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Is Google Gaga For Groupon To The Tune Of $5BN

While respected analysts question the soundness of deal-based social buying, Google has reportedly offered a staggering $5.3 billion for industry leader Groupon.

The deal -- which sources tell BoomTown could go down as early as Wednesday -- "will move the search giant instantly to the top spot in local commerce online and give it huge troves of data about consumer buying habits and merchant information across the globe."

As such, "It is a killer move for Google--despite the high price-given it has long tried to enter the local advertising space, with decidedly mixed results."

"Industry observers say Groupon's ability to straddle the worlds of online retail and brick-and-mortar commerce makes it attractive to a range of companies" -- and Google in particular -- notes the Chicago Tribune.

"If Google buys Groupon for $5.3 billion ... it would go down as one of the most spectacular venture investments since, well, probably Google," writes The Wall Street Journal.

No doubt, combined with its pending acquisition of travel data leader ITA Software, a Groupon grab will send government regulators and antitrust lawyers into a tizzy.

Antitrust concerns aside, Search Engine Land's Greg Sterling says Google would be crazy -- with a "capital C" - to drop $5 billion on Groupon.

"Google is sitting on more than $30 billion in cash so maybe $5 billion isn't so much in that context," writes Sterling. Yet, despite a strong revenue stream and immediate control of the local deal space, he suggests: "Just as we now see 'check-in fatigue' with Foursquare et al, there is what I will call 'deal fatigue' emerging."

On the contrary, "It would be worth every overpriced penny," insists Mashable. "Groupon has an asset that Google covets so highly that it's willing to pay billions: local advertisers."

As TechCrunch reasons, what seems clear is that "buying Groupon would be a very risky $5 billion bet for Google in an unproven area outside its sweet spot of search."

Read the whole story at BoomTown et al »

2 comments about "Is Google Gaga For Groupon To The Tune Of $5BN".
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  1. Jeffrey Fry from Profit Prophet, November 30, 2010 at 6:01 p.m.

    'this is a case of having more money than brains...and is absolutely stupid...this is going to cost Google more money that the Youtube disaster.

  2. Ian Gilyeat from I.R. Gilyeat & Company, December 1, 2010 at 2:40 p.m.

    The real treasure trove isn't the local advertiser - it's the ability to close the loop between search and purchase. The ability to track from search through to a purchase at the cash register will give Google the ability to drive up the price they currently charge for search. Groupon is a multiplier across the entire business. It's not just another segment of the market for ad dollars.

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