Google Gonna Buy Digg.com For $200 Million

[Wednesday, July 23, 2008 | 0 comments ]

In Bollywood Movies their is a Dialogue like this:
"Every Big Animal In the Forest Owns The Smaller Animals"

Same thing looks in the world Of Websites.Google’s on and off negotiations with Digg have been back on in a big way for the last six weeks, we’ve heard from multiple sources inside and outside of Google. The two companies have reportedly signed a letter of intent and are close to a deal that will bring Digg under the Google News property. The acquisition price is in the $200 million range, says one source.

If Google acquires Digg, which many sites are reporting as a done deal, it’ll be a little something I call a vanity buy. Which would mean that Google doesn’t really need Digg; it wants it. And if Google is smart, it’ll just leave Digg as it is.The thing is, Digg and other social media sites are very much dependant on having an active, vibrant community. I might be proven wrong, but history has shown that these types of sites never get enormous; and their users are not too keen on clicking ads. In short, they’re not the goldmine everyone thought they would be (hence the thousands of Digg clones out there).

So - if the rumors are true - why is Google buying it? Because it’s cool. It has formidable traffic, yes, but the main reason why anyone would want to own Digg is influence. Let’s face it, it’s a very influential site: some are trying to game it, some are trying to win it (it can be a game, you know), some are trying to understand it and profit from it. But the fact that it’s such an enigma, with its users constantly redefining what works and what doesn’t, is one of the reasons it’s so popular.

The other reason why Google would want to buy Digg is the simplest of all: because they can. Digg is the first and best site in an entirely new niche, and if the price is not outrageous, Google can afford it, so why not own it? If nothing else, it’ll give them a great opportunity to find out about the inner workings of this specific and complex social media ecosystem.

Most of Digg’s revenue comes from a three year ad deal with Microsoft, which will be terminated on a sale to Google. Digg has raised $11.3 million in venture capital.

Therefore, I think that it would be dumb for Google to try to do anything to Digg, especially immediately after the acquisition. It could cause a backlash from the community. If they acquire it, they can move some ads around and try to leverage the influence in some ways, but the best thing they can do is enjoy it and go with the flow.

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