Google (NASDAQ:GOOG) has been looking to get into the online daily deals business for months now.
Last November, it appeared the search-engine giant was set to spend big on the rising star of the industry, Groupon, making a bid of $6 billion for the business. This came after months of back-and-forth bidding with onetime rival Yahoo (NASDAQ:YHOO). Google never did buy Groupon, and on Dec. 21 the word was that Google had set its sights on acquiring two of Groupon’s core competitors, LivingSocial and Buy With Me.
But Google isn’t buying those companies either. Instead, it has become a case of “If you can’t buy ’em, beat ’em.” Google said over the weekend it will begin testing its own online daily deals business, Google Offers, which will send out deals to Google users for promotions at local businesses, restaurants, and hotels.
The Wall Street Journal reported that the venture will be spearheaded by its head of e-commerce, who had a successful stint at eBay(NASDAQ:EBAY). That would potentially mean Google Offers could, at the very least, open for business with a healthy stable of exclusive partners.
Of course, this means Google is starting from scratch, and the company will have to work fast to take on a startup that is expected to post a half-billion dollars in revenue for 2010.
While the pre-existing base of Google Gmail and Google Account users, not to mention Android smartphone users, would appear to give the company a leg up in establishing their daily deals business, the popularity of some Google services hasn’t guaranteed the success of new ones in the past. Google’s notorious failed social networking tool, Google Buzz, is a perfect example of an attempt to cash in on a popular Web business that failed to connect. Google shareholders shouldn’t expect Google Offers to be the next big thing to line their pockets just yet.
Meanwhile, investors should expect other companies to renew bidding on Groupon, LivingSocial and Buy With Me. Groupon raised $1 billion in private investment following the disintegration of the Google deal, making 2011 a guaranteed year of positive growth for the business. It’s unlikely that Yahoo can muster the capital to bid on Groupon again, but other tech firms just might court the company. It wouldn’t be surprising if Amazon.com (NASDAQ:AMZN) went all-in buying Living Social if its initial investment of $175 million helps that extend that business’ reach.
At the time of publication, Anthony John Agnello did not own a position in any of the stocks named here.