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Digg Rumored to Be Google’s Latest Acquisition
by
Anne Szustek
Tech insiders say that the search engine is in the final stages of talks to acquire social bookmarking site Digg for about $200 million, continuing Google’s habit of buying new toys.
30-Second Summary
According to blog TechCrunch, Google has spent the past six weeks vying for Digg, the popular site that has users rank online news and multimedia. The two companies had been chatting off an on since March, when Digg initially rebuffed any takeover proposal. But Google and Digg are now rumored to have signed a letter of intent to move forward on a buyout.
A takeover of Digg would throw the social bookmarking site into Google’s war chest of some 30 partial or total acquisitions. Among them: online video host YouTube, photo site Picasa, and Postini, which Salon calls “the software implementation of The Man.”
The Motley Fool contests that a purchase of Digg has a two-fold strategy. First, Google would have a news-sharing tool in its kit—but also, it would buffer against Microsoft, which has an advertising deal with Digg.
“If Microsoft—a company as notorious as the New York Yankees for overbidding in its acquisitions—isn’t raising a bidding card, Digg would be best served to shake hands with Google quickly,” The Motley Fool writes.
But with its hands in so many pots, is a social news site worth Google’s time and money? Critics of Google’s expensive shopping sprees wonder if the company is stretching itself too thin. Advertising executive Rishad Tobaccowala said in a 2006 New York Times article that the search engine was “overextended, like Napoleon opening up a Russian front. … I think they are a very amazing company that will take over nothing.”
A takeover of Digg would throw the social bookmarking site into Google’s war chest of some 30 partial or total acquisitions. Among them: online video host YouTube, photo site Picasa, and Postini, which Salon calls “the software implementation of The Man.”
The Motley Fool contests that a purchase of Digg has a two-fold strategy. First, Google would have a news-sharing tool in its kit—but also, it would buffer against Microsoft, which has an advertising deal with Digg.
“If Microsoft—a company as notorious as the New York Yankees for overbidding in its acquisitions—isn’t raising a bidding card, Digg would be best served to shake hands with Google quickly,” The Motley Fool writes.
But with its hands in so many pots, is a social news site worth Google’s time and money? Critics of Google’s expensive shopping sprees wonder if the company is stretching itself too thin. Advertising executive Rishad Tobaccowala said in a 2006 New York Times article that the search engine was “overextended, like Napoleon opening up a Russian front. … I think they are a very amazing company that will take over nothing.”
Headline Links: Google reportedly close to acquiring Digg
TechCrunch reports that Digg and Google “are now in final negotiations according to our sources, although it could be a couple of weeks before it closes.”
Source: TechCrunch
Silicon Alley Insider writes that if the deal goes through this time, it will spell “a nice return for Digg’s investors, which include Greylock Partners, Omidyar Network, Netscape founder Marc Andreessen, and LinkedIn founder Reid Hoffman.”
Source: Silicon Alley Insider
Background: Some of Google’s major acquisitions
On Feb. 17, 2003, Google announced its takeover of PyraLabs, the parent company of Blogger, a popular blog-hosting site. Indicative that blogs were then a novelty, British paper The Guardian describes them as sites that “mostly serve niche audiences, typically contain frequently updated opinion and links to material around the internet.”
Source: The Guardian
Google bought photo-sharing site Picasa in July 2004 for an undisclosed amount. Fredrick Marckini, the CEO of marketing firm iProspect, elaborated on the possibilities the acquisition could present Google in terms of online advertising: “All the people looking at photos may likely see Google’s contextual ads displayed by their photos. … The caption provides captions, such as ‘Here’s my friend Julie with her 10-speed Schwinn.’ Now we can show contextual ads for Schwinns on blogs.”
Source: Clickz
Following a year or so of negotiations, in December 2005 Time Warner and Google announced an agreement that, in exchange for $1 billion, the search engine got a 5 percent stake in AOL. Time Warner’s price-per-share had dropped in value from around $100 in 200 to $17.74 in late 2005. AOL’s profitability had also steadily decreased over the five-year period. Wrote Business Week, “The alliance could also give Google a leg up in its perennial battle with Microsoft.”
Source: Business Week
Google announced on Oct. 9, 2006, that it was acquiring video-sharing leader YouTube for $1.65 billion in stock options.
Source: CNN
Corporate communications site Postini was snapped up by Google for $625 million in July 2007. The service allows companies to filter and monitor employees’ use of the Internet, including instant messaging, Web browsing and e-mails.
Source: Salon
The largest Google acquisition to date is the $3.1 billion purchase of online advertiser DoubleClick. U.S. antitrust regulators gave the deal a green light in December 2007. The Federal Trade Commission explained in a statement, “After carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition.”
Source: The Times of India
Key Player: Digg
When it comes to online journalism, Digg is the poster child of Web 2.0. On Digg, the users make the editorial decisions about what floats and what sinks. The site is ad-supported, but remains privately owned and without the trappings of a social network. What’s the site’s next move?
Source: findingDulcinea
Opinion & Analysis: Savvy spender or shopaholic?
Investment analysis site The Motley Fool argues that a Google buyout of Digg would lend the search engine a viable conduit into the social bookmarking network: “Other sites, like Reddit and StumbleUpon, have helped democratize the news-filtering process, but Digg is the name everyone knows. It’s the verb.”
Source: The Motley Fool
Publicis advertising executive Rishad Tobaccowala said in early 2006 of Google’s reach in online advertising, that the search engine lacks human perspective: “Human beings can never be captured in an algorithm, and Google only understands algorithms.”
Source: The New York Times (free registration may be required)
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