If Google Buys Groupon, It's Doing So to Fend Off Facebook
Google (GOOG)'s reported acquisition of Groupon for $2.5 billion gives the search giant a weapon with which to bash Facebook's nascent "Deals" function for advertisers. Google and Facebook are increasingly circling each other like giants for control of the web. (Groupon would also give Google a foothold inside eBay.)
- UPDATE: The deal is not done yet!
- Groupon lacks the ability to innovate because it is dependent not on proprietary technology but a sales force of thousands of people brokering deals on the phone with local businesses.
- Google's entire business revolves around automating the kind of jobs human salespersons used to do.
One assumes Google has a plan to fix this flaw with Groupon, and to then link its services into its Android/Admob ad serving technology. That prospect would put Google and Groupon streets ahead of Facebook's Deals function, which is kinda like Groupon only on Facebook, and is not yet widely used. There is no reason that Groupon and Deals can't both exist, of course, except that Google's vast size will allow it to chisel down Facebook's profit margins (and those of competing firms such as LivingSocial).
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