Google (NASDAQ:GOOG) shelled out $1.97 billion in cash and stock for a record 79 acquisitions in 2011, the biggest of which was the company's $676 million purchase of ITA Software.
The deal was hung up by regulatory scrutiny at the hands of the U.S. Justice Department, which was concerned Google would gain too much power and influence over the travel search niche. Kayak, Expedia, Microsoft and several other travel search providers protested the acquisition, but the DOJ ultimately cleared the deal in April 2011.
Google also acquired ad market specialist Admeld for $400 million, another deal that was held up slightly under regulatory scrutiny; $151 million for restaurant review guide maker Zagat; and $114 million for daily deals asset Daily Deals.
The company's acquisition numbers were up considerably from 2010, when Google shelled out about $1 billion for 48 companies. In fact, Google acquired more companies through its third quarter 2011-57-than in all of 2010.
The takeaway from this is that Google is not shy about ponying up cash for assets that fill in holes in its core search, advertising, mobile, video and commerce business units. The idea is to pay to compete versus Facebook, Microsoft Bing and other competitive threats online.
"These acquisitions generally enhance the breadth and depth of our expertise in engineering and other functional areas, our technologies, and our product offerings," Google noted in its SEC filing. "Acquisitions will also remain an important component of our strategy and use of capital, and we expect our current pace of acquisitions to continue."
Most of Google's 2011 acquisitions were targeted at boosting its local business and commerce search efforts. Zagat will be used in Google Places for local business search.
Daily Deals, along with loyalty card provider Punchd, coupon provider Zave Networks and daily deals aggregator DealMap, will likely be used to fortify the Google Offers deals and Google Wallet mobile payment services.
Google's YouTube arm bought video producer Next New Networks, which is being used to help fashion new channels on YouTube, as well as Fflick for social sentiment analysis and Green Parrot Pictures for video processing.
Google could have actually spent closer to $15 billion in acquisitions last year if its $12.5 billion bid for Motorola Mobility (NYSE:MMI) was consummated. The DOJ and European Commission are scrutinizing the merger, which Google announced last August. Google expects the deal to close early this year.