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Digg’s homepage
Google Drops Bid for Digg
July 28, 2008 11:11 AM
by
Anne Szustek
Sources from the tech industry say that after meetings between top executives at the search engine and the social bookmarking Web site, there just “wasn’t a fit.”
30-Second Summary
After spending the past six weeks vying for the popular site that has users rank online news and multimedia, Google has abandoned its quest. The search engine notified Digg of its decision late Thursday or Friday, TechCrunch reports.
The two companies had been chatting off and on since March, when Digg initially rebuffed any takeover proposal. Google and Digg had reached the due diligence stage of negotiations, at which company’s technical and financial holdings face deep scrutiny.
“One source said that the issue was more personality driven, and that Google decided after spending more time with Digg’s top team that there just wasn’t a fit,” TechCrunch writes.
A takeover of Digg would have thrown 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 would have had a two-fold benefit. First, Google would have a news-sharing tool in its kit. It would also help Google 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 wrote before negotiations ended.
Even without acquiring Digg, Google already had some critics of its expensive shopping sprees wondering 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.”
The two companies had been chatting off and on since March, when Digg initially rebuffed any takeover proposal. Google and Digg had reached the due diligence stage of negotiations, at which company’s technical and financial holdings face deep scrutiny.
“One source said that the issue was more personality driven, and that Google decided after spending more time with Digg’s top team that there just wasn’t a fit,” TechCrunch writes.
A takeover of Digg would have thrown 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 would have had a two-fold benefit. First, Google would have a news-sharing tool in its kit. It would also help Google 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 wrote before negotiations ended.
Even without acquiring Digg, Google already had some critics of its expensive shopping sprees wondering 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 Link: ‘Google Walks Away from Digg Deal’
Digg has hired Allen & Co. to assist in a new round of financing. The investment bank “represented both Slide and Ning in their recent a half-billion dollar valuation financings,” TechCrunch reports.
Source: TechCrunch
Background: Google and Digg in negotiations last week
TechCrunch reported July 22 that Digg and Google were “in final negotiations according to our sources, although it could be a couple of weeks before it closes.”
Source: TechCrunch
Silicon Alley Insider wrote at that time that if the deal went through, it would mean “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
Historical Context: 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: Google: 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)
© 2009 Dulcinea Media, Inc.
