Is Google overpaying for Groupon?

When a company has a lot of cash and not so many new sources of revenue, it can be tempting to buy its way into new markets. But such a strategy has its risks, which are best illustrated by ill-fated acquisitions like eBay’s $3.1 billion purchase of Skype in 2005. eBay ended up taking a writedown for the deal and sold off two-thirds of the company at a $2.75 billion valuation four years after the purchase.

The eBay-Skype story comes to mind as Google is close to paying as much as $6 billion for Groupon. Like eBay, Google is a company eager to find new revenue in emerging areas of growth. Just as eBay was seeing its online marketplace business mature, Google is needing to find growth outside of its core business of search.

eBay thought Skype could easily be folded into the company, even though it could never explain why online auctions and phone calls over the Internet was a natural fit. Google’s hunger for Groupon seems twofold: Groupon has a strong local component to it, and local is a clear priority for Google. And Groupon will bring Google a steady customer base it hasn’t been able to build on its own for local and social features.

But here too, it’s hard to see a natural fit between Groupon’s deals of the day and Google’s existing services. Google’s revenues come from serving online ads, whether in its search results, inside YouTube videos or alongside Gmail inboxes. Groupon may offer more real estate for Google ads, but clickthrough rates may not be as high as on search results.

Google may be hoping to sell more ads to the retailers using Groupon’s service. But even this seems like a small return for the price Google is paying. And while Groupon is reportedly profitable, it’s not clear whether Groupon’s profit margins will match the 25% that Google routinely produces.

Kim Kardashian most Binged in 2010

Celebrity, socialite and reality TV star Kim Kardashian was the most popular search term on Microsoft’s Bing search engine this year, outshining fellow American luminaries Lady Gaga and the U.S. president.

Kim Kardashian

In a year of earthquakes, floods and faltering economies, it seems most people turned to celebrities to relieve the steady flow of grim news. Or looked for ways to save money.

According to Microsoft, the most popular overall 2010 searches on Bing were : 1) Kim Kardashian, 2) Sandra Bullock, 3) Tiger Woods, 4) Lady Gaga, 5) Barack Obama.

Google wants Groupon, but is the feeling mutual?

Kara Swisher at AllThingsD is hearing that Google is in talks to buy the online-deal-of-the-day startup Groupon, citing multiple “sources close to the situation.” It’s easy to imagine why Google would be interested in this acquisition. Groupon not only stands at the intersection of the social web and local commerce, two areas Google is eager to expand into. It’s also a bonafide success, with 20 million users in hundreds of U.S. cities.

What’s harder to imagine is that Groupon is just as eager to put itself on the block just yet. Two months ago, Swisher reported a similar conversation happening between Yahoo and Groupon, with the former bidding more than $2 billion for the startup. Groupon may be shopping itself around for a number of reasons—one of them could be that it’s not interested right now in an actual deal, but generating press with high valuations of $2 billion, $3 billion or more is very handy when negotiating a new round of private investment.

For successful web companies right now, it’s clearly a seller’s market. Google, Microsoft and others may be sitting on tens of billions of dollars in cash, but at the same time, private equity is so abundant that another round of venture capital always remains an option. And if you’re cash-flow positive, why deal with the scrutiny and regulation an IPO would bring, or the culture clash and loss of independence that comes with an M&A deal?

Facebook’s Zuckerberg on relationships with big companies

Facebook has had its differences with Google and Apple in recent months. FACEBOOK/

And Facebook CEO Mark Zuckerberg tried his best not to comment directly on the budding rivalry with the two tech titans during his appearance at the Web 2.0 conference in San Francisco on Tuesday.

But Zuckerberg did offer some clues about Facebook’s philosophy towards working with big companies that might offer some insight into its relationships with Apple and Google.

“If you’re a very large company and supporting you is going to cost us tens of millions of dollars, then we want to at least have an understanding of how you’re going to use what we’re doing, and that you’re not just going to import the data but also try and contribute back to the ecosystem and make people’s Facebook experience better.”

Google and the last days of the credit card

The future is no longer in plastic.

Or such was the message from Eric Schmidt when he was talking at the Web 2.0 conference in San Francisco. Credit cards are about to become as obsolete as the Sony Walkman in the age of the iPod. Replacing them will be the smartphone – Android phones in particular.

Next week, Google will release a new version of its Android mobile operating system software, called Gingerbread. Gingerbread will support near-field communication, a technology that marries allows the smartphone to act like a credit card. The technology relies on a chip with a range of several inches that allows wireless payment transactions much more simply and, according to Schmidt, securely than a standard credit card.

The thing with near-field communication is, the whole notion of location takes on a new meaning. Now I can just tap I don’t have to take a picture I don’t have to scan a barcode… We think the overall mobile market which is already exited about these payment systems, will benefit from having this because it’s a secure element that is very hard to steal. And the theory is you can take these mobile devices and walk into a store and it will be able to figure out where you are with your permission. Effectively to bump for everything. And eventually it will replace your credit cards.

Google’s new approach to the social Web just may work

Picture of Eric SchmidtEric Schmidt is fond of saying that the web isn’t a zero-sum game – that there is plenty of room for two emerging rivals like Facebook and Google to innovate and compete with both growing their revenue.

That’s true enough, although it clearly will be a zero-sum game in a few years, and the winner is surely planning today for tomorrow’s confrontation. Google, for its part, seems to be basing its strategy on the assumption that not everyone will want to join the web platform Facebook is building, and that there is a lot of growth to be found in the web beyond Facebook – that is, the area of the web that Google pretty much controls.

It’s a risky bet, but it seems like the smart one for Google right now. The company has been building social network after social network – Orkut, Buzz, Wave – with mixed results at best. But now it looks like Google has decided to regard social networking as a feature for search. The latest evidence of that approach is in its Tuesday announcement of Hotpot.

Google to speed up searches with visual Web site ‘previews’

Google’s search engine has a new feature that may cause Web surfers to do less…Web surfing.

The company’s new Instant Previews announced on Tuesday provides visual snapshots of Web pages directly within the list of search results, making it easier and quicker to home in on the Web page you’re looking for.

Instant Previews, which will be rolled out during the next few days, puts a small icon of a magnifying glass next to most of Google’s search results. Click on the magnifying glass and Google serves up a screenshot of the Web page, highlighting the section of the page that’s relevant to your search query.GOOGInstantPreview

RockMelt’s secret social Web browser makes debut

The Web has evolved drastically during the past two decades. But the Web browser remains much as it has since it was first created.RockMeltScreen

That’s the premise behind RockMelt, a new browser that bills itself as having been built from the ground-up for the realities of today’s Web 2.0 world, in which interacting across social networks is as important as viewing Web pages.

The new browser has been under development in “stealth” mode for two years and has been the subject of much speculation, particularly since one of the company’s main investors is Marc Andreessen, the man credited with creating the first mass-market graphical Web browser.

Facebook’s Zuckerberg on mobile ads: What’s the hurry?

Apple and Google may be battling for a piece of the nascent mobile ad market, but Facebook is happy to sit on the sidelines.FACEBOOK/

Despite the fact that more than one-third of Facebook’s 500 million users sometimes access the social networking service from a cell phone, Facebook does not currently show any ads to its mobile users.

And Facebook CEO Mark Zuckerberg says he’s not in any hurry to begin generating mobile advertising revenue.

Facebook Mobile Event on Nov 3: Is this the secret Facebook Phone?

Here’s something to keep the rumor mills churning through the weekend.FBFone

Facebook has just sent out an invite to the media for a “mobile event” at its Palo Alto, California headquarters on Wednesday November 3.

Could this be the unveiling of the much-speculated about Facebook phone? You may recall that technology blog TechCrunch reported last month that Facebook was secretly developing a special smartphone.

Facebook then issued a carefully-worded response that said the company was not “building” a phone, but that it had projects focused on “deeper integrations with some manufacturers.”