Google Challenges Groupon in Local Deals

Google Jan. 20 confirmed Google Offers is a product it is planning to offer consumers local daily deals from businesses. Yes, like Groupon.

Google confirmed it is preparing a prepaid deals program that would compete with local deals giant Groupon, which the search engine failed to acquire late last year.

Mashable broke the news Jan. 20, citing confidential sources. Normally spoken word sourcing beckons Google to respond with its "will not comment on rumors or speculation" mantra.

However, the tech blog secured a confidential fact sheet that defines Google Offers as "a new product to help potential customers and clientele find great deals in their area through a daily e-mail."

The report essentially forced Google to confirm the product, with the corresponding pictures and documentation showing that Google Offers is very much a Groupon clone. A Google spokesperson told eWEEK:

"Google is communicating with small businesses to enlist their support and participation in a test of a prepaid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted."

Page two of the fact sheet provides plenty of information itself. A writing team at Google will whip up clever marketing material for an offer. Then the offer is shuttled to local subscribers, touted across Google's ad networks and advertised on the Google Offers Web page.

Once a subscriber receives the local deal of the day, they may buy that deal. When enough people have made the purchase through Google Checkout, the deal is triggered (or tipped, in Groupon parlance). Users may then redeem their coupon at a local store by printing it out before hand or on their mobile phone.

According to Mashable, Google will pay out 80 percent of a business' revenue share three days after its deal runs. Google will hold the remaining 20 percent for 60 days to cover refunds before sending the rest.

Evidence of Google Offers comes just a month after Groupon reportedly rebuffed a $6 billion acquisition offer from Google. Instead, Groupon is set for an initial public offering worth a reported $15 billion. Meanwhile, Amazon-backed LivingSocial sold more than 1.3 million $20 Amazon gift cards for $10 a pop.

Google Offers, however, is so much like Groupon at this stage that one wonders whether Google will run into legal trouble over the similarities.

It's also way too early to guess how Google will fare. Google has thousands of businesses using its Google Places offering, so asking them to offer deals and share revenue is a logical step up from simply asking them to advertise on Google through its Tags and Boost services.

Yet Groupon has about 50 million subscribers, adding thousands each day largely thanks to the publicity over its merger talks with Google. Challenging Groupon on its market battleground may not be the same as challenging Facebook in its social networking turf, but it's no easy task.