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posted: 8/2/2011 2:06 PM

Google strikes deal to acquire daily deal service

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Associated Press

SAN FRANCISCO -- Google Inc.'s latest deal aims to help people find the best daily deals on the Web.

In its latest acquisition of talent and technology, Google has bought Dealmap. It's a 15-month-old startup that compiles discount offers from local merchants scattered in markets across the nation.

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Financial terms of the acquisition announced Tuesday weren't disclosed. It's the latest in a flurry of acquisitions that Google has made to expand its Internet empire into promising new markets. Since the end of 2009, Google has spent more than $2.7 billion buying more than 70 companies.

In this case, Google is trying to become a bigger player in the rapidly growing specialty of distributing daily bargains from local merchants around the country. Groupon and LivingSocial have emerged as early leaders, but hundreds of competitors are now vying for a share. Google, as the owner of the Internet's most popular search engine and most lucrative ad network, looms as one of the most imposing entrants.

Google is adding Dealmap to its arsenal just a few weeks after starting its own daily deal service. Its version, called Offers, currently confines its bargains to New York, the San Francisco Bay area and Portland, Ore., but Google plans to add more cities. The company developed its service after Groupon turned down a $6 billion takeover offer last year.

"We've been thrilled with the early success of our commerce offerings, and we think (Dealmap) can help us build even better products and services for consumers and merchants," Google spokeswoman Katelin Todhunter-Gerberg said.

Groupon, which is based in Chicago, is now pursuing an initial public offering of stock that's expected to be completed in September or October. Although it's only three years old, Groupon already is on pace to generate more than $2 billion in annual revenue -- a threshold Google didn't eclipse until its sixth year in business.

Both Groupon and LivingSocial have been aggressively expanding in an attempt to build on their early lead in the daily deal market. LivingSocial broadened its reach in Asia on Tuesday with its own acquisition of a South Korean deal site called TicketMonster.

Dealmap, which based in Menlo Park, Calif., has built a database that lists deals from more than 450 different sources. It says it has more than 2 million users.

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