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Digg Rumored to Be Google’s Latest Acquisition

July 23, 2008 06:11 PM
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

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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.”

Headline Links: Google reportedly close to acquiring Digg

Background: Some of Google’s major acquisitions

Key Player: Digg

Opinion & Analysis: Savvy spender or shopaholic?

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