Archive: July, 2008

Google is rumoured to be interested in acquiring the social news website Digg. While this rumour has been circulating for a while both CNET and TechCrunch are reporting on the possible purchase this week with Techcrunch going as far as a headline reading, “Google In Final Negotiations to Aquire Digg…”. The rumoured purchase price is around $200million.

A number of people might wonder why Google would want to buy Digg. I think there are a number of reasons ranging from technical patents and processes to the number of eyeballs Digg could bring to Google’s ad inventory.

Google makes the vast share of its revenues from paid search advertising. Approximately 95% of Google’s quarterly revenues come from AdWords advertising. Every website displaying AdWords constitutes virtual real estate for Google to plunk billboards on. If someone else owns the property, Google does a revenue share with them when visitors click on AdWords ads. If Google owns the property however, it has to share with nobody. Digg draws a lot of traffic.

Digg also has patents and processes Google might wish to incorporate into future sets of search engine results. As noted in a post here last Friday, Google has been seen experimenting with search results that use a Digg-like voting and comments system.