Rumor: Google Buys Groupon Deal In $2.5 Billion Deal

Nov 29, 2010 at 7:26am ET by Barry Schwartz

Over the past week, there has been many rumors that Google would be making a buy-out offer to Groupon, the popular local deals site. Those rumors have heated up this morning, with Vator.tv reporting the deal has closed, with Google buying Groupon for $2.5 billion.

Google or Groupon has yet to confirm the deal but these rumors seem to be pretty legit. TechCrunch documented tweets between Andrew Mason, CEO and founder of Groupon and Google’s M&A lead Neeraj Arora in September possibly talking about deals between the two companies.

VatorNews said their insider details come from an unnamed source and they have said Google and Groupon will not confirm the deal, yet.

Once we get confirmation, we will make sure to update this post.

For more details, see Techmeme.

Postscript: Google has told us “we don’t comment on rumor or speculation.”

Postscript 2: See Google To Buy Groupon This Week In $5 to $6 Billion Deal?

Related Topics: Google: Business Issues | Google: Partnerships | Groupon

About The Author: Barry Schwartz is Search Engine Land's News Editor and owns RustyBrick, a NY based web consulting firm. He also runs Search Engine Roundtable, a popular search blog on very advanced SEM topics. Barry's personal blog is named Cartoon Barry and he can be followed on Twitter here. For more background information on Barry, see his full bio over here. See more articles by Barry Schwartz

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http://www.makesocialsell.com Jeff Molander

Hi, Barry. This is actually dangerous for Google. Here’s why:

Groupon is not a company offering **sustainable value** so much as they are a run-of-the-mill venture capital investment toy.

You see, Groupon is today’s Restaurant.com — minus the entrepreneurial sensibility. Restaurant.com burned through the restaurant market with its similar “buy a $25 gift certificate for $3″ model. But they stopped when small businesses owners it served figured out the simple math. They looked at the profitability of customers. There wasn’t enough to sustain participation with Restaurant.com’s model.

Increasingly, qualified research is being published on Groupon’s effectiveness http://bit.ly/f3Hn2N and the result is not surprising: Small business owners don’t define “effective” as having anything to do with “profitable.”

Groupon is advertising. But with a twist. It trains an “increasingly already trained” retail shopper to **expect** the discount, tip less and not return without receiving ANOTHER a profit-dinging discount.

Like in affiliate marketing, it’s disingenuous to say, “Groupon gets paid on performance — only when it sends customers to the door” when the facts are so stark. It sends customers who are remarkably un-profitable under this discount model.

Ironically, Chicago-based Restaurant.com got out of the short-term business just in time to re-structure its offer. The rest is history.

Bottom line: Groupon “trains” boatloads of customers to expect future discounts in a growing retail environment that breeds the same. Retail suicide is in full swing. And Groupon is not a real company offering **sustainable value** so much as they are a run-of-the-mill venture capital investment toy.