I appreciate good Google acquisition stories as much as the next fellow, but the search engine really need to tread lightly with this Groupon stuff.
In case you haven’t been following the wickedly spinning rumor mill, Google has been in talks all week to buy local shopping Website Groupon, which e-mails millions of users daily discounts from participating providers based on location.
When talk about this Groupon deal started in earnest in October, Yahoo was going to buy it for $1.7 billion. Then, around Thanksgiving, Google was reportedly offering $2 billion to $3 billion for the startup.
Now things have gottenseriously ridiculousserious with the twice sourced detail that the asking price is somewhere between $5 billion and $6 billion.
Considering how few people have even heard of Groupon outside Chicago, San Francisco and New York, that price takes us back to the halycon days of 2000 and the dot-com bubble burst.
Maybe Groupon will one day be worth more than the $3.1 billion Google shelled out for DoubleClick and the $1.65 billion it paid for YouTube combined, but it’s not right now.
If Google does this deal for $5 billion or more — one year after whiffing on local search power Yelp — it will strike me and many others as an aggressive, slightly desperate play to keep Groupon from Yahoo or Microsoft.
But I suspect getting Groupon would be most aimed to offset the body blows Google will take in local from Facebook Deals, the local offers service that will be super popular for people as the social network adds more participants.
As valuable as Groupon could be for Google, make no mistake: this is about thwarting the competition, which leads us to the point about why is not the time to do this.
Point 1: Google has having one heck of a time closing its $700 million bid for travel software company ITA Software.
Why? Competition, or anticompetition more precisely. Expedia, Kayak and others fear Google will shut them or price them out of the market they helped cultivate. The Justice Department is looking into the deal.
Point 2: Google is being investigated by the European Commission for alleged anticompetitive practices in Europe. Specifically, Foundem, Ciao and eJustice say Google is holding them down in Google.com search results.
With those two issues, Google doesn’t need any more heat for anticompetitive practices If it bids for Groupon now, I can’t imagine the Federal Trade Commission or DOJ would take kindly to Google making another power move.
This would solidify, in watchdogs’ and regulators’ minds, that Google has become too greedy.
If I’m Google, I take my time on this one. Slow things down, and buy Groupon in 2011. Hopefully, things will be a little quieter than.
Because right now the heat is on. Google now reminds me a little of Robert DeNiro in this scene from Heat: