comScore

It’s Good to be the King: Google, Groupon and One Heck of a Daily Deal

Every conversation I overheard while at the Business Insider IGNITION conference over the past two days was about Google and Groupon.  It seemed to have overtaken the weather as the top conversation starter; this was a tech conference after all, and Google is still king. (For now.)

Hitwise came out with data yesterday that showed Groupon owns 79% of the market share, while their top competitor LivingSocial only has an 8% share.  (I’ll spare you the graph, but if you’d like to see it, click here.)

So the question everyone is asking is, should Groupon sell?  And, at the $6 billion price, the bigger question is, is this even something they need to think about?  $6 billion would be the largest amount Google has ever spent on an acquisition, but is this two-year-old company out of Chicago really worth $6B or is Google taking a play out of the NewsCorp playbook by picking up the current giant, only to [potentially] have it fall in a few years?

What’s interesting to note is that if Google just wanted the technology, they could build it.  Does Google want the user base? I mean, it’s Google – they know people’s deep dark secrets, I’m pretty sure they would know what someone would like to buy before they even knew it was available.

Something is missing here.

Now I’m not saying Groupon shouldn’t sell (because I think they should), but why does Google want to get into commerce game?  And, is Google offering too much for a company that is still relatively new?  There’s speculation that Google will integrate Groupon into their places/maps search results, but $6B is a lot of money, and couldn’t Google technically just scrape this information and figure out a rev share with the sites?  I wonder what’s in store.

It’s no secret that Groupon is not high on my list of favorite companies.  Not because I don’t admire what they do, but they recently told my company, Dealery (full disclosure: I’m the founder), that they don’t want to pay commissions anymore for aggregators, “because they want to look out for their merchants” only to find out a few weeks later they struck a deal with Yahoo.  (What’s up with your merchants now, Groupon?) While at the same time, LivingSocial has gone above and beyond with commissions and being supportive of aggregators that are trying to promote their deals.

No one is too big too fail. Groupon may be king today, but the problem with being king is that everyone tries to dethrone you.

One of the biggest problems with web success is the low barrier to entry for copycats. But just because someone can make a site that looks and acts like Groupon, doesn’t mean that site is going to be as big or as successful as Groupon.  Groupon isn’t just worried about LivingSocial or Tippr, they’re worried about companies that have a vast subscriber list getting into the game.  The one thing all these sites have in common is that they’re trying to bring Groupon down.  They almost don’t even care to compete with one another — they want to kill the king, and with everyone attacking from all sides, it’s only a matter a time before the king is hurt.

Just because Groupon was the first in the space doesn’t mean they’ve won. They’ve simply taught people the concept of a deal a day — and the same way that White Castle was first in the space, it was only a matter of time before McDonalds and Burger King came in and took over.

Selling would be very smart for Groupon, and I hope Andrew Mason enjoys his days on a yacht touring the world.  I’m still unsure about Google.

Limor Elkayam is the Founder and CEO of Dealery.com, a daily deals aggregator, and Spotery.com, a curated social news aggregator.  Limor has 5+ years of experience in the ecommerce space and strives to make consumers lives on the web easier by creating time saving ways to consume the web’s expansive content.

Have a tip we should know? [email protected]

Filed Under:

Follow Mediaite: