Google loses Groupon, nabs video, voice companies

Google had reportedly offered up to $6 billion for Groupon

Google has reportedly failed to acquire Groupon, but it did buy two companies on Friday, one focused on online video and the other on speech technology.

Google's negotiations with Groupon were said to be very advanced last week, with Google reportedly ready to shell out as much as $US6 billion for the online coupon provider.

At that price, Groupon would have been by far Google's most expensive acquisition, and many industry observers balked at the price, saying it seemed excessive.

Over the weekend, ChicagoBreakingBusiness.com and The Wall Street Journal separately reported that talks between the two companies had collapsed, primarily because some Groupon board directors remained unconvinced about taking the Google offer. Groupon will reportedly consider going public next year.

Groupon, launched in November 2008, partners with local merchants to offer deep discounts on their wares, but deals don't kick in until a minimum number of Groupon members commit to them.

Groupon, which takes a commission from each deal, has sold more than 18.1 million coupons and has a staff of about 3,000 employees.

It raised $135 million in its latest funding round in April, raising its valuation reportedly north of $1 billion. Financial analysts estimate that the company will generate about $500 million in revenue in 2010.

With Groupon, Google would have acquired relationships with a large number of local merchants in the U.S. and abroad, and millions of consumer members, giving Google a prominent place in the coupon distribution market and boosting its local advertising business.

Although the Groupon deal fell through, Google did manage to snap up two other companies. One of them, Seattle-based Widevine, provides video delivery, video optimization and digital-rights-management technology to clients including AT&T, Netflix, NBC and Samsung.

"We are committed to maintaining Widevine's agreements and will provide direct, quality support for their existing and future clients -- and we plan to build upon Widevine's technology to enhance both their products and our own," wrote Mario Queiroz, a Google vice president of product management, in a blog post.

Meanwhile, Phonetic Arts develops speech synthesis technology designed to improve the quality of spoken language in video games. Based in Cambridge, England, Phonetic Arts counts Sega, EA Sports and Sony Computer Entertainment among its customers.

"Phonetic Arts' team of researchers and engineers work at the cutting edge of speech synthesis, delivering technology that generates natural computer speech from small samples of recorded voice," wrote Mike Cohen, manager of speech technology at Google, in a blog post.

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Tags internetbusiness issuesGoogleMergers / acquisitions

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Juan Carlos Perez

IDG News Service
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