Google CEO sees one small acquisition a month from Reuters reports Google’s CEO as saying they are back in the business of acquiring businesses. He told Reuters, “acquisitions are turned on again at Google and we are doing our normal maneuvers, which is small companies.” “My estimate would be one-a-month acquisitions and these are largely in lieu of hiring. There may be larger acquisitions, but they really are unpredictable,” Schmidt added.

Google slowed or halted all acquisitions sometime around early January of this year. Most recently, Google acquired reCAPTCHA, but you can read about more of their acquisitions in the Google acquisitions category here.

TechCrunch has linked to a cute map of Google’s acquisitions.

Hopefully this is another positive sign that the recession is just about over.

The big news is that Google has officially acquired reCAPTCHA. reCAPTCHA are those funny looking letters you see when you fill out forms, asking you to enter in the letters into a box, in order for you to validate that you are indeed a human.

Why did Google buy them? Not for the CAPTCHA feature, but as a way to improve their OCR technology, the technology they use to understand scanned words. reCAPTCHA has a pretty large database of letters they collected matched to what actual humans thought those letters were. This is somewhat similar to how Google Image Labeler works, where Google shows you an image, and a human types what that is an image of. In the reCAPTCHA scenario, they are showing you a scanned word from a newspaper and asking humans to tell them what that word is. By collecting billions of these matches, Google can use this data to improve their OCR technology in the realm of Google Book Search or Google News Archive.

The second bit of acquisition news is the rumor that Google will buy Brightcove for $500-$700 million. Brightcove is an online video platform typically used by media companies to publish and distribute video across the Internet. Brightcove is less of a user generated platform then YouTube, but more of a media distribution venue for video. The rumor stems from a tweet from Mark Glaser, where he said:

Source with knowledge of deal tells me video service Brightcove in talks with Google about buyout in $500m to $700m range.

Neither company has confirmed or commented on these rumors. For more coverage, see Techmeme.

Postscript: A new report is saying this Brightcove Google rumor is false.

This had been reported before, but Google CEO Eric Schmidt acknowledged that Google had looked at investing in or buying a newspaper in an interview in London with the Financial Times:

FT: Would you ever consider buying a newspaper; they’re cheap right now?

ES: We’ve actually looked at this and we’re trying to avoid crossing the line between the infrastructure and technology that Google provides and the content that our partners provide. There is a line and we’re trying to stay on our side it.

Schmidt thinks that charging for news won’t work online. He cited a few exceptions for “high quality” news and “specialized” publications. He was less concerned about the state of news and news gathering in major US metros. Rather he expressed concern about the potential disappearance of newspapers in smaller markets:

The real loss that we’re having right now is the loss in the secondary markets, where there was not that much money to begin with, there were not that many newspapers to begin with and reporters. And I’m concerned that the reporting that keeps the Mayor honest, that kind of local is largely going to be gone. They don’t know how to fix that.

Schmidt also discussed Google’s “platform” collaboration with the Washington Post:

With a number of newspapers, and The Washington Post being an example, we are very interested in trying to develop online news versions that somehow address the immediate needs of people and for which advertising works better. Without commenting specifically about products it seems to me that the newspaper that I read online should remember what I read. It should allow me to go deeper into the stories. It’s that kind of a discussion that we’re having.

There are “altruistic” and selfish reasons for Google to help newspapers and journalism. The former recognizes is that newspaper journalism plays an important role in the society and Schmidt clearly discusses this when he talks about newspapers and journalism. The latter is two-fold: Google directly benefits from newspaper content; and in its ongoing lobbying against regulatory intervention in its markets, Google can win points with Congress for helping newspapers succeed online.

Some newspaper owners and publishers have set up Google in the same way they’ve set up Craigslist as a kind of scapegoat for some of their own failings. But Google is genuinely interested in having newspapers succeed.

Here’s a summary and a video of the FT interview (reg. req’d). There’s also more discussion on Techmeme.

TechCrunch reported late last night that Twitter was in late stage talks to be acquired by Google. That sent what used to be called the “blogosphere” into a frenzy. Kara Swisher, of AllThingsD, striking back against what she believes was sloppy journalism (and TechCrunch more generally), said no:

In fact, Twitter and Google have simply been engaged in “some product-related discussions,” according to one source, around real-time search and the search giant better crawling the microblogging service.

Said a source close to Twitter: “There was a discussion with [Google executive Marissa Mayer's] group about real-time search and about product stuff. It was a couple weeks ago. It was very preliminary…and that was that.”

Almost immediately the “Google vs. Microsoft: who will win?” discussion kicked back in. However, I agree with TechFlash’s Todd Bishop that Microsoft should be looking seriously at Twitter, which has already become an arguably more effective marketing vehicle than Facebook (which unsuccessfully tried to buy the site in an all stock deal). Twitter would still be a fraction of the cost that it would take to acquire Facebook.

Assuming Swisher is correct that there are product-level discussions between Twitter and Google about incorporating Twitter content (tweets) into Google results, it’s a smart thing for both companies. Often a “strategic partnership” is a prelude to an acquisition however. And we can say with almost 100 percent certainty that Twitter will be acquired; it’s just on too much of a tear to not be.

Even though it has almost completely disappeared from the market otherwise, the old logic is operating in this case: “I have to get that asset or my competitor will.”

Postscript: Twitter co-founder Biz Stone was on The Colbert Report last night and said that Twitter was going to remain an “strong, independent” company and that the service would be extended globally to the world’s “four billion mobile phones.” He also said the company would begin “experimenting” with revenue models this year and likened the company’s trajectory to Google.

Does that mean he’s thinking about an IPO in the future or is that simply the requisite talk that we would expect him to make in a public setting? The fact that there were serious acquisition discussions between Facebook and Twitter does strongly suggest that the company is thinking about allowing itself to be acquired (certainly the investors are thinking that way). An IPO for Twitter, even if it had 200 million users around the world still seems very unlikely.

Postscript From Danny Sullivan: A key question is whether Google would even be allowed to acquire Twitter, if it wanted. Microsoft led the lobbying to stop the Google-Yahoo ad partnership deal from happening, and that wasn’t even an aquisition. With Twitter now one of the important and new areas of search (real time search), I’d expect any attempt by Google to acquire it to be challenged by Microsoft as giving Google yet too much control over search. I’d also expect Microsoft to get into a bidding war for Twittter, but the anti-trust threat also gives them a stick to go with any carrot they wanted to dangle in front of Twitter.

Google is announcing two changes to search results this morning. The first involves the use of longer “snippets” (text extracts containing the keywords) when users input queries of three words or more. The objective is to provide more context to help the user determine if the site is worth visiting. Many search engines have attempted to address this same problem with visual tools or “previews” of one sort or another. (Vanessa will postscript with more detail about snippets.)

It’s difficult to predict whether or how longer snippets will affect user behavior but it may create incentives to input longer queries over time. Longer queries theoretically lead to better results and more targeted ads.

The other and more significant change introduced today is based on the 2006 acquisition of “Orion.” Orion was a search technology announced in 2006. It never got a chance to fully develop or launch as a consumer-facing site. Here’s Danny’s post at the time Orion and developer Ori Allon were acquired by Google. And here’s how the press release put out by Allon described Orion’s capabilities and benefits:

Orion finds pages where the content is about a topic strongly related to the key word. It then returns a section of the page, and lists other topics related to the key word so the user can pick the most relevant.

“The results to the query are displayed immediately in the form of expanded text extracts, giving you the relevant information without having to go the website–although you still have that option if you wish,” said Israeli-born Allon, who completed a Bachelor and Masters degree at Monash University in Melbourne before moving to UNSW for his PhD.

“By displaying results to other associated key words directly related to your search topic, you gain additional pertinent information that you might not have originally conceived, thus offering an expert search without having an expert’s knowledge.

“Take a search such as the American Revolution as an example of how the system works. Orion would bring up results with extracts containing this phrase. But it would also give results for American History, George Washington, American Revolutionary War, Declaration of Independence, Boston Tea Party and more. You obtain much more valuable information from every search.”

The idea of finding information without having to click through to websites came from Allon’s supervisor, Eric Martin, back in March this year. “I provided the spark. But it is Ori who has developed this through his amazing creativity and sheer hard work over these past months,” said Mr Martin.

That description is thematically consistent with the expansion of snippets as a “preview” strategy. But the way Orion is being implemented is through search refinements. Refinements are a collection of links that contain related query formulations. They currently appear (mostly) at the bottom of results pages as “searches related to . . .” Here’s an “old” example for “French Revolution“:

Refinements will now be improved and appear more frequently, and more often at the top of pages. These changes will launch globally, in 37 languages across Google. Here’s how Google describes how the new refinements will operate:

Starting today, we’re deploying a new technology that can better understand associations and concepts related to your search, and one of its first applications lets us offer you even more useful related searches (the terms found at the bottom, and sometimes at the top, of the search results page).

For example, if you search for [principles of physics], our algorithms understand that “angular momentum”, “special relativity”, “big bang” and “quantum mechanic” are related terms that could help you find what you need.

Some people will use the term “semantic search” to describe the technology behind the new refinements. But that term has largely been drained of meaning through excessive use in my opinion. Yet, what Google says it’s doing is better “understanding” the relationships between queries and related concepts and presenting those as refinements. This is a version of what Powerset claimed to be doing (and indeed appeared to do) in its proof of concept with Wikipedia before being acquired by Microsoft.

I spoke yesterday to Google and Ori Allon. To the extent that I understood his discussion of the way Orion’s technology had been applied to refinements here’s what’s going on at a high level: pages are being scanned in “real-time” by Google after a query is entered. Conceptually and contextually related sites/pages are then identified and expressed in the form of the improved refinements. This is not solely keyword based but derived from an “understanding” of content and context.

Even though the technology is being used at the moment only in refinements, and thus at the margins of search results, this appears to be a first step in a larger integration of Orion’s technology. It thus struck me as a potentially significant development.

Last week Google confirmed that it had made its first Korean acquisition, a popular blogging platform called TNC, which has approximately 400,000 users, including a majority of Korea’s top bloggers (per VentureBeat).

The site’s founder and CEO Chang-Won Kim said that he thought Google bought the company to boost its “minor” market share in Korea, the sixth largest internet market.

The rumored potential acquisition is Washington-based computer games developer Valve, which owns Steam an online gaming distribution platform.

Early last year Google acquired in-game advertising company Adscape Media. In that context a Valve acquisition would make sense; Google would instantly have considerable inventory to roll out. Not so far removed from online gaming, Google also launched virtual world Lively not long ago.

Like Lively, Valve’s Steam is something of a social network too, with multi-player gaming. And steam is consistent with Google’s “cloud computing” strategy — one can access the games from “any PC.” (Microsoft of course owns the Xbox gaming system and acquired in-game ad platform Massive last year.)

Again the Google Valve acquisition is a rumor. But if Google does acquire the company, one can see an interesting, more coherent opportunity here: online gaming + virtual worlds + social networking + advertising (targeting selected, desirable demographics).

Postscript: Others have written that the potential Valve acquisition is not really about gaming. Rather it’s about content distribution (via Steam) and pushing online software updates to users. My experience is that Google never does anything for a single reason; there are always multiple perceived benefits to any acquisition or initiative the company undertakes.

SmartMoney reports that Google has sold off the search marketing division of DoubleClick, Performics, to a French company named Publicis Groupe.

When Google purchased DoubleClick, they acquired Performics with it. Google promised to sell off the Performics division, due to the conflict of interest in owning such a company. Today, they sold it to Publicis Groupe.

It is actually interesting that they sold it to Publicis Groupe. Google has partnered with Publicis in the past to “expand in the fast-growing digital advertising market . . . [and that] Google would exchange its technological know-how for Publicis’s analytical and media planning expertise.”

The transaction is still subject to some customary closing conditions, but it is expected that the deal will close something in the third quarter of 2008.

There are ways in which Digg is like YouTube: it’s the “brand” in a competitive “social news” segment that also features Yahoo Buzz, AOL’s Propeller, MySpace News, Reddit, Ask Big News and, by some counts, more than 80 others. Similarly, YouTube was the “brand” in a crowded video segment when Google acquired the company.

Digg has more or less been for sale for months and rumors have been circulating that either Google or Microsoft would buy the company.

Now TechCrunch is reporting that Digg is close to selling for $200 million to Google. That compares with the originally rumored $300 million price target.

Digg has a display ad deal with Microsoft, which presumably would end or be threatened if Google actually acquired the company. But that’s the least interesting part of this rumor.

More interesting to consider is how and where Google might use Digg or its underlying algorithms. For example, Google has been testing an experimental interface that allows for individual and community voting on the relevance of search results. It thus may be that a Digg acquisition would hold broader, general search implications for Google.

Digg itself started life as a “news” site but is angling to become a much broader “recommendations engine” across a range of categories. One might see that integrated into Maps/Local and other areas on Google. Indeed, the company always seems to have several motives and use cases for its acquisitions.

Assuming for a moment the truth of the rumor, Eric Eldon at VentureBeat asks a very interesting question: why doesn’t Google build its own version of Digg? It certainly could. And while Digg is a popular site, it’s hardly the mainstream breakaway success that YouTube had become when Google acquired the latter in October 2006.

In fact, Digg has fallen behind the newer Yahoo Buzz in terms of traffic according to comScore. So it may be something of a perishable asset; Digg itself seems to be acting that way.

There’s more coverage and discussion on Techmeme.

Google announced that it had acquired “Begun,” a Russian contextual ad service, for $140 million. The service had been a unit of Russia’s Rambler Media. Rambler also owns the Russian portal Rambler.ru. As part of the deal, Google-enhanced search results and ads will appear on the Rambler portal site.

According to Reuters, Rambler expects annual growth of online ad revenues to be 50 and to reach $1 billion by 2010.

The acquisition makes sense given that there’s more growth opportunity now in non-US markets. International revenues now make up just over 50 percent of total ad revenues. From Google’s Q2 earnings release:

Revenues from outside of the United States totaled $2.80 billion, representing 52% of total revenues in the second quarter of 2008, compared to 48% in the second quarter of 2007 and 51% in the first quarter of 2008. Had foreign exchange rates remained constant from the first quarter of 2008 through the second quarter of 2008, our revenues in the second quarter of 2008 would have been $88 million lower. Had foreign exchange rates remained constant from the second quarter of 2007 through the second quarter of 2008, our revenues in the second quarter of 2008 would have been $249 million lower.

Revenues from the United Kingdom totaled $774 million, representing 14% of revenue in the second quarter of 2008, compared to 15% in the second quarter of 2007 and 15% in the first quarter of 2008.

Many people have posed the question: why does Google seem to often fail to efficiently integrate or develop companies and properties it has acquired? Early mobile social network DodgeBall is the most obvious example of a promising startup acquired by Google that has languished. But as TechCrunchIT points out, there are others and, more specifically, often a long delay between the time of a company’s acquisition and its “re-emergence” with a Google identity.

Citing YouTube as an exception to such integration delays, the TechCrunch post speculates that it’s because the acquired company’s engineers and developers have to learn Google’s proprietary software stack and that can take months:

One of the first main challenges for a company that has been acquired by Google is adopting the proprietary technology stack used within the company. Google does use Linux and open source, but their core technologies are all internal to the company. I have heard that it can take a new engineer at Google anywhere from 3-6 months to become accustomed to using these tools and services.

I’m sure that’s not the full story in every case, but it’s an interesting insight.