November 29, 2010, 1:51 PM

Rumors swirl around Google acquiring Groupon

An investment firm report suggests the deal is done.

Zak Stambor

Managing Editor

Lead Photo

A research report from investment firm Benchmark Capital suggests that Google Inc. has purchased daily deal site Groupon. Another report from says the deal is worth $2.5 billion.

However, neither Groupon or Google would confirm the acquisition.

In the report Benchmark says that it views the move positively.




“While expensive, Groupon provides Google entry into the emerging daily deal segment,” says the report. “Groupon is local in nature, which could build on Google's positioning in the ‘long tail’ with small and medium-sized businesses. There are potential synergies with Google's core search.”

The acquistion would be similar to Google’s purchases of YouTube and online advertising company DoubleClick in that the search giant is using cash to establish its position in a relatively new segment, says the report.

“Since YouTube and DoubleClick are both gaining share and posting sizable revenue numbers, we think Google's acquisition history has been solid,” says the report.

The rumors come only a few weeks after Yahoo Inc. jumped into the daily deal arena by aggregating offers from more than a dozen deal-of-the-day sites, including Groupon, LivingSocial and BuyWithMe.  The companies taking part in the service, which Yahoo calls Local Offers Program, are paying Yahoo an undisclosed share of revenue.

Google and Yahoo's interest in the daily deal space shows that the daily deal business model is not going to be a short-lived fad, says Tim O’Shaughnessy, CEO and co-founder of LivingSocial.

"Big players entering the space provide even more validation to what we know is a successful and growing business strategy," he says.

Comments | 1 Response

  • I am an administrator of a collective buying site: Group Buy United ( and we our merging with a number of group buying sites to help their businesses succeed. Google is capable of buying such site but many big investors cannot rationalize the fact that GroupOn will sell itself to Google more than $3 billion. I look forward to comments about this for I am occupied on why this large deal site will sell itself to Google in such a big amount.

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