Markets

Google Wins in Losing $6 Billion Bid for Groupon

By Catharine Taylor

Updated on: December 7, 2010 / 11:44 AM EST / MoneyWatch

So sad, really, about Groupon. Here its founders had the chance to sell the company for $6 billion to Google, but, instead, it has turned its back on the search giant, thinking that, one day, it might launch an IPO. You might think I have the two protagonists mixed up -- since many people have wondered if, in losing its bid, poor Google is going to find itself out in the cold from social commerce. Far from it.

Actually, Google is missing just about nothing in losing its bid to own a site that, this week, has offered me deals at the Red Market Salon on Gansevoort St, 10 musical playdates at Symphony Space on the Upper West Side, guitar lessons on Eighth Avenue and a couple's massage at the Empire Hotel. Maybe that sounds great -- but not to me.

I signed up for Groupon a few months ago, hoping for more great crowdsourced coupons like its fabled half off on clothing at GAP, but the above is what I got instead -- a random assortment of poorly-targeted offers that hold absolutely no interest for me. The site's biggest problem is that its regional focus can make it inherently uninteresting to all except those who live in the neighborhood where the offers exist. From the list above, you might assume that I was a Manhattan resident with young kids and a hankering to play guitar.

Turns out I live outside the city, my kids are too old for musical playdates, and though I'd love to play guitar, or take a trip to the salon, the chances of me doing either by going into the city are pretty slim. But, when I originally joined, New York City was the closest region offered to my house.

The answer to that problem of untargeted offers is, of course, building out the reach of its advertising base, which Groupon is doing. But here's something curious: it wasn't until I went on the site today in researching this post that I discovered Groupon has added offers in Westchester County -- where I happen to live. Turns out this happened back in October. But Groupon has never notified me of this rather salient fact -- even though it has my zip code. So, instead, of getting today's deal for chili at a restaurant three miles away, I got an offer in my emailbox for an eyebrow and Brazilian bikini wax at an outfit in Brooklyn, almost 25 miles away. Sure, this is one user's story, but this is a company worth $6 billion?

While Groupon gets its act together, everyone else will catch up. Not only are there copycats like Amazon-backed LivingSocial out there, but other retailers you might have heard of -- like Walmart -- are getting in on the action. In reporting the Google/Groupon breakup, Bloomberg BusinessWeek noted: " ... Groupon was an unusual acquisition target for Google, which tends to buy companies that boast a technological advantage, such as online video, as was the case with YouTube." In other words, building a company that offers group deals just ain't that hard. Strangely, Google was about to spend $6 billion on an idea rather than a technology -- maybe it's finding its engineers are too busy building that driverless car to build a Groupon-like platform of their own.