6 ms·

Google to Launch Groupon Competitor

149 points by jamesjyu 16y ago

il 16y ago
This create a really interesting dilemma for Google. A significant portion of Groupon's subscriber base comes from the Google Ads they are running. Now Google can either: 1. Ban Groupon from advertising on AdWords 2. Use the CTR and conversion data from Groupon's campaigns to learn exactly how to target ads for Google Offers. Since they have massive amounts of data from Groupon's campaigns, it's definitely feasible for them to capture lots of their traffic. But will they really run Google Offers and Groupon ads next to each other?
- marquis 16y ago
  This brings up an interesting question - what are the ethics involved in Google having exceptional access to market data in the area it competes in?
  - patio11 16y ago
    You mean like, say, search or cost per click advertising? Google routinely uses it's position as market maker in search and Internet advertising to gain an advantage on other participants on the Internet. Take AdWords. Many smart people, including many people on HN, think that AdWords is an auction. AdWords is not an auction. AdWords has a price discovery strategy which is partially auction-like, but the actual ad displayed will be a) from whomever Google darn pleases at b) whatever price Google darn pleases. (In addition to being best at the world at processing large amounts of information, Google isn't too shabby at PR, so they call this Quality Score and tell people that the revenue maximization strategy for the world's largest advertising firm is in people's best interest... and people believe them.) In addition to displaying explicit preferences for particular businesses and for/against particular business models, Google uses large amounts of proprietary black magic to determine minimum pricing. For example, keywords in a field known to be awash in money with no competition will not be priced at the systemwide minimum price, but will rather be priced much higher. The exact level is, again, wherever Google darn well pleases. They have teams of very smart people working on revenue maximization. I love AdWords. It's the best idea any corporation has come up with in the last twenty years, and is largely responsible for me being at my kitchen table right now instead of being miserable in my cubicle. But let's not kid ourselves: Google is not a one-off gentle giant surrounded by 499 for-profit corporations on the Fortune 500.
    - yuhong 16y ago
      Well, it is a gentle giant compared to many other big companies out there.
- chrisaycock 16y ago
  Google can just claim #2 as a natural competitive advantage. (It's like if Apple were to build an OS-level feature that competes with an app.) Option #1, however, could get Google in trouble for anticompetitive behaviour.
- robosox 16y ago
  These are exactly the kinds of questions that the "don't be evil" motto is supposed to answer. That phrase has been flung around over the years by people who get angry at Google for this-or-that, but during the time I worked there, I found that the most common internal usage of the phrase spoke directly to ethical dilemmas like this. I have a feeling they've kept that in mind while building this product.
- patrickaljord 16y ago
  They'd be sued for doing 1. plus it's unlikely given that they accept Bing which is an even more direct competitor. 2. is probably illegal. Don't think it's worth it for google to put itself into so much trouble.
  - chrisaycock 16y ago
    Is #2 really illegal? What's to stop Wal-Mart from analyzing sales receipts before deciding which store-brand product to introduce next?
    - jbooth 16y ago
      Not exactly equivalent.. Wal-mart's a distribution channel, Google's more of a marketing channel. Although it gets fuzzy.
    - greendestiny 16y ago
      I doubt it, but maybe if they did explicitly use Groupon's data directly from their campaign. If they just look at searches and clicks then all that data is surely theirs to use.
    - gojomo 16y ago
      If it's illegal, I suspect it's only indirectly so, by some roundabout after-the-fact fair-trade-practice or antitrust analysis, based on Google's dominance of search advertising. Which means: very arguable and not much of an up-front deterrent for a motivated competitor. In their privacy policies – which concern 'personal information' with far more legal sensitivity than aggregate ad/transactional data – Google pretty much grants themselves carte blanche to "combine the information you submit under your account with information from other Google services or third parties in order to provide you with a better experience and to improve the quality of our services" and/or "Provide, maintain, protect, and improve our services (including advertising services) and develop new services".
  - elvirs 16y ago
    it is phony practice though it will be really hard to prove that certain decisions made by Google were based on analysis of AdWords data from Groupon campaigns.
- bradly 16y ago
  > Now Google can either: 1. Ban Groupon from advertising on AdWords 2. Use the CTR and conversion data from Groupon's campaigns to learn exactly how to target ads for Google Offers. Umm.. Are those really Google's only choices?
  - jessriedel 16y ago
    I think he means that Google can either ban or not ban Groupon from AdWords. If the latter, than #2 becomes possible.
- taylorbuley 16y ago
  I see Groupon ads all day. Any guesses on how they might rank in terms of overall AdWords accounts?
  - il 16y ago
    According to our data they're in the top 10 largest AdWords advertisers, at least by reach.
- rokhayakebe 16y ago
  What about slapping that on their homepage or search result page?
- cristinacordova 16y ago
  Google has never banned advertisers they compete with. You'll see ads for Bing, Yahoo etc. in Google Search all the time.
  - patio11 16y ago
    Google is the world's largest affiliate and the world's largest search arbitrageur, and they ban affiliates and search arbitrageurs all day long. This is so that they capture a larger portion of advertising spend and do not leak it people who they believe do not add value. (Google is an affiliate: they do cost-per-action advertising on behalf of customers. Google is a search arbitrageur: they have a large source of searches which they can acquire cheaply, a large number of pages with content which is not quite responsive to user needs, and advertisers who are willing to pay for targeted traffic. The difference between Google and other search arbitrageurs is that typically the arbitrageur outsources the search engine and owns the content, where google owns the search engine and outsources the content to its AdSense partners.)
    - ntoshev 16y ago
      You can redefine anybody's business to look like he is competing with anyone else. The point is, those Bing and Yahoo ads still run on Google, so maybe there is some other reason for banning some affiliates, eh?
    - jongraehl 16y ago
      Key difference: Google's "search arbitrage" is consensual (explicitly requested or permitted by all parties, assuming robots.txt is honored).
adityakothadiya 16y ago
Ok, help me understand this - if Google really wanted to get into this business, and if they couldn't acquire Groupon, then why didn't they try to acquire Groupon clones like LivingSocial, and many more? What could be rational behind starting from scratch?
- deleted 16y ago
  [deleted]
- oniTony 16y ago
  After Amazon's investment into LivingSocial, the valuation shot into "over $1 billion" http://techcrunch.com/2010/12/02/livingsocial-confirms-175-million-amazon-investment/ http://techcrunch.com/2010/12/02/livingsocial-confirms-175-m... but controlling only 8% of the market, vs Groupon's 79%. It would have been a very expensive acquisition. For everything else near 0% market share, Google can probably easily get ahead on its own brand name.
- elvirs 16y ago
  Google acquires mainly technology and talent, or in some cases it would pay big bucks to acquire marketshare. There is not much technology behind group buying things. And none of the Groupon competitors have the marketshare Google wants. Thats why it makes more sense for Google to spend that billion dollars on advertising/promotion etc. to gain probably more marketshare than getting LivingSocial's 10% or whatever.
Kilimanjaro 16y ago
Try google.com/offers and you get a different 404 than if you typed offer, deals, coupons, etc...
- idm 16y ago
  Good catch. Furthermore: curl -v http://google.com/404 results in this HTTP header: Server:sffe Whereas: curl -v http://google.com/offers results in: Server: GSE So they're obviously proxying from a totally different subsystem.
chanri 16y ago
With the 200+ million gmail email addresses that Google has access to, Google can instantly become a major competitor to Groupon & LivingSocial assuming a certain percentage of gmail users agree to try it. It seems that each large internet company has its own deals site now: Google with Google Offers, Amazon with LivingSocial, eBay with Groupon, and Facebook seems to be developing its own type of daily-deals advertising. I wonder what Apple and Microsoft will do. Both of them probably have something in the works....
- Joakal 16y ago
  I have several gmail addresses. Don't fall for the number hype.
elvirs 16y ago
Goopon?
- shadowfox 16y ago
  Goopun :p
zoomzoom 16y ago
Google has enough publicity power and local business relationships (AdWords, Places) that they will have less trouble than anyone else signing up businesses to be part of the deals. Probably even FB. Then, they also have their ad network and services (gmail, search, maps, etc) to sign up users and promote offers. This is 2 good solutions for problem #1 for a local business deals network. Google is making a smart move. Most of the bigger deal sites share an uncanny similarity - they are called "clones" for a reason. And the way to stand out is to offer better deals. I have gotten the Groupon newsletter since they came to NYC, and I have never bought a deal. And I am usually a very compulsive shopper. There is not enough variety and nothing is that compelling. The way to stand out is to target deals better so you can make money on margins instead of volume and offer more lucrative deals for businesses. FB may have as much data, but Google has shipped better big-data targeting than anybody else. You need to acquire, sort, and analyze the data, and then have the relationships to exploit your insights. And as location, purchase history, and timing come into play, the data is going to get big if you want to target deals well.
- CurrentB 16y ago
  This. The notion that Google would even need to resort to low brow tactics other people are mentioning (like snooping on Groupon advertising data or banning them outright) are pretty absurd, obviously immoral and completely unnecessary for this to work. I've also been a Groupon member and after not seeing anything compelling for awhile I'm starting to dismiss it as spam. Google has a ton of users on the business and consumer end, and a ton of public trust despite all this recent rambling. For the price they were going to pay for Groupon they can make this work. They will be able to attract offers that can appeal to a wider audience do to their sheer volume of their current business clients who are already earning solid ROIs advertising from Google and could easily be enticed to give this new Offers thing a try.
- daveambrose 16y ago
  "And as location, purchase history, and timing come into play, the data is going to get big if you want to target deals well." Data, especially at scale, is extremely powerful in this business: http://techcrunch.com/2011/01/11/why-we-invested-in-groupon-the-power-of-data/ http://techcrunch.com/2011/01/11/why-we-invested-in-groupon-... The one question I continue to have in a situation like this is the "bytes v. beings" approach. Self-service is very compelling and certainly the "holy grail" of local advertising, but more often than not, the onramp to Google for small business is AdWords and that's hard, really hard to understand for a small business owner. I'm not sure if the small business owner is really reading through Google's AdWords University documents and watching the YouTube videos. You're going to need people to sell to people and not just bytes on a screen. The salesforce, in the immediate term, I feel is the largest initiative Google needs to take on. Demand will always be there, especially across their widespread network. Just get the best merchants (note: quality of the deal is still important in large markets like NYC) and perfect the sales process.
iantimothy 16y ago
It seems to me that with this launch, Google has become more like Microsoft when Google was gaining some sort of ascendancy - a juggernaut that is so afraid of the upstarts that they chase the shadows of the next big thing, in this case Groupon. The local search & commerce space cannot possibly only look like Groupon. On Hacker News, we have seen people try different models & different variations. There are some ways that doesn't even rely on deals. Just yesterday we saw http://getpunchd.com/ http://getpunchd.com/ a mobile play on loyalty schemes. And Google has Android, a mobile OS coupled with what was once and possibly still the best mapping site on the web. It would seem figuring out how those two combined can be the wedge into the local space should be their priority instead of being scared into creating a clone.
- robryan 16y ago
  They tried to buy groupon, having that fall through doesn't it make a lot of sense to create a business doing the same thing you were going to do with groupon? These deals are embraced by a large number of people, why try and innovate into a new model that regular people don't get or like when there is already a perfectly good one out there with heaps of traction.
  - ScottBurson 16y ago
    Except that Groupon is a "people business", with lots of sales and support staff. This is antithetical to Google's culture. I'm not at all sure Google is going to win this battle. Will be interesting to watch.
    - cristinacordova 16y ago
      Google has plenty of salespeople as is and has bought plenty of companies with a large number of salespeople (Doubleclick/Admob). They were also willing to take on Groupon's thousands of salespeople with the $6B offer.
      - notahacker 16y ago
elvirs 16y ago
'With its vast reach, huge resources and brand recognition, it could prove to be a powerful player in the space.' Yeah, just like it did with Buzz. Though this time it actually has more shots at it.
ssclafani 16y ago
The logo, maybe: https://www.google.com/images/logos/offers_logo.gif https://www.google.com/images/logos/offers_logo.gif
- greendestiny 16y ago
  Wow that's ugly. I don't know if the Google brand is the best thing for them to use here, maybe they could have bought a lesser Groupon competitor and kept their brand. It seems from the outside that Youtube is one of Google's most successful purchases because they kept it a little separate.
  - mortenjorck 16y ago
    "Goopon" somehow just didn't feel right.
- deleted 16y ago
  [deleted]
elvirs 16y ago
One of the reasons Google may fail at this is the support call center. Groupon has large and professional support call centers that around the world that takes care of customer inquiries, something very distant to Google culture
- knowsnothing613 16y ago
  IT's called outsourcing for a reason.
  - elvirs 16y ago
    zappos does not outsource that for a reason.
olalonde 16y ago
IMHO, they will crush Groupon if they execute well. Groupon is still relatively unknown outside tech circles.
- didip 16y ago
  Nah, I wouldn't be too sure about it. They haven't even kill Facebook or Twitter yet.
  - Charuru 16y ago
    They didn't clone Facebook or Twitter?
    - brownleej 16y ago
      I thought that was the point of Orkut and Buzz.
      - philwelch 16y ago
        Orkut may not have predated Facebook, but it predated the wide spread of Facebook--as I recall, I was able to use Orkut before Facebook expanded to my college.
  - deleted 16y ago
    [deleted]
  - petervandijck 16y ago
    Groupon doesn't have network effects to protect it.
- mlinsey 16y ago
  FWIW I was introduced to Groupon by two people far removed from of tech circles. When I first tried it, it didn't even really occur to me that I was looking at a hot startup. I think its mindshare is plenty good among non-tech people in urban areas.
- 16y ago
izak30 16y ago
Lesson: Don't turn down an offer from Google. They buy because they want in the space.
- code_duck 16y ago
  This behavior is essentially what Microsoft did from 1985-2000. Companies that turned down offers saw their software cloned within 2 years, and sold at a discount or bundled with other MS products.
  - loewenskind 16y ago
    Exactly. I can't wait until some YC companies start being at the receiving end of this behavior so the insane level of Google worship on this site can finally go away.
  - petervandijck 16y ago
    Classic embrace and extend (or embrace and make cheaper).
- brown9-2 16y ago
  I wouldn't be so quick to cede things to them. How many other areas have they entered recently and killed, especially ones that are fundamentally non-technology based?
  - izak30 16y ago
    Sure, that all depends on what you want out of the business.
drivebyacct2 16y ago
It'd be interesting if they incorporated this well with their NFC work they're doing with Android.
- gregable 16y ago
  I'm curious, how would you imagine that working?
knowsnothing613 16y ago
This is just the beginning. Google will offer local business bundled QR services. Imagine walking up to a restaurant window. snapping a QR photo, or google goggling, and having the menu displayed on your android, and maybe offers you a daily deal. Google wins in mobile, and entrenches itself into the local ad space. Can Apple Do this?
- aaronbrethorst 16y ago
  Wouldn't that be the same restaurant window that already has a menu mounted on it?
  - jeremydavid 16y ago
    That made me smile :) "Look at this brilliant technology. Just take a picture of this symbol and your phone automagically translates it into list of specials and prices!" "Why don't they just put up the menu/specials?" "oh..."
speby 16y ago
Classic Google. First they try to buy Yelp.com and that fails, so they build Google Places (TBD if that turns out to be more successful). Now they tried to buy Groupon and failed and now they're potentially creating a clone of that instead. I guess these are classic examples of Build vs Buy.
trotsky 16y ago
Update 2: We’ve also learned that Google will pay out 80% of a business’ revenue share three days after its deal runs. Google will hold the remaining 20% for 60 days to cover refunds before sending the rest. This is a pretty significant piece of the news. With groupon famous for its slow payment terms, 3 day terms may look very attractive. Cash flow management is a big portion of running many small/local businesses and with most of their vendor terms from 7-30 days the 30+ day delivery from groupon can turn a big success into a big problem. This sounds like a great sales differentiator for them. Even if google doesn't get significant traction out of the gate, if this forces groupon to abandon their aggressive floats it could have a real effect on how good their financials look leading up to an IPO. Imagine if Google was willing to take a significantly lower revenue share on the deals to gain market share. A big reason everyone is so breathless about the business model is how crazy the margins are. If google was willing to throw a significant amount of the $6B offer price at a promotional pricing structure they could seriously slow down the rate that the competition expanded markets.
- hop 16y ago
  If the businesses were worried about cash flow, I think the 75% haircut would be the bigger issue. Also, they will likely be pre-paid for a large percentage of their Groupon patrons (I have many I haven't used from months ago) and not everyone ends up using their coupon. Businesses flock to Groupon because its popular and puts them in the spotlight for a day to tens or hundreds of thousands of local people on their mailing list and twitter followers.
  - petervandijck 16y ago
    Mmm, I think you misunderstand cashflow. It's not how much money you make, it's how fast you get it.
- petervandijck 16y ago
  Let's say they spend not 6 but 1 billion dollars to make this work, over the next 3 years. That means they can spend 1000000000/365/3 = 1 million dollars a day on providing awesome deals, for 3 years. Don't tell me that won't work.
DevX101 16y ago
Newspapers and other local advertisers will be a take a big hit while the Big G's battle it out.
netcan 16y ago
If I were a Google investor I would be watching this very closely for two reasons: a- See how Google overcome their issues in dealing with customer service and related things. They'll need to get better at this stuff at some point to have the widest possible scope for trying new things. b- See if they can pull off another extension of their core business. Adwords is the ultimate small business advertising platform and Groupon is another part of that world.
ramonRecuero 16y ago
Groupon is going to face a lot of competition these next months. Now Yelp is offering some similar deals related with food....
davidedicillo 16y ago
I wish they were focusing more on improving their search engine than jumping in any possible business...
FirstHopSystems 16y ago
I wonder when Groupon will become a verb for falling out of relevance due to one trick pony/smarter competition. I guess MySpace'ed or Yahoo'ed never caught on. OMG Ponies!!!!1!!
cft 16y ago
I wonder if there is any casual relation between Google's failure to acquire Groupon and removal of Eric Schmidt from CEO...
ck2 16y ago
I for one welcome more group-deal sites, I think we all win, as long as they are reputable. I wish however Google instead had taken on PayPal more directly and more intensely and even make an ebay competitor (google base will never be ebay or even craigslist). PayPal/Ebay is rolling in profit, I am not sure why Google doesn't want some of that.
- InclinedPlane 16y ago
  eBay is certainly an aging service. It has had very few significant feature changes since perhaps 1998 or so. However, it does have a fair amount of competition (amazon and craigslist being the best examples). Most of the competition for eBay comes in the form of catering better to particular segments of the market. Craigslist caters more to the yard-sale segment (timeliness, locality, and just-getting-rid-of items being more important than maximizing revenue or selling/buying niche items). Amazon caters to small, niche sellers (people selling lots of used books, or trans-shipping medical supplies, etc.) More competitors will come along targeting more and more segments of eBay's current market. Paypal is a different story. It's a very much harder business on the fundamentals. One of the world's largest financial institutions which has grown up in the blink of an eye and faces problems on a scale that no other bank in the world faces. Criticism of paypal is often fair, but sometimes it's ungrounded from perspective (of the "garsh, why don't these piece of junk hover-shoes work right?" variety). The real criticism should be toward our archaic banking systems and regulation. The services that paypal offers should ideally be built into any old bank account, but they aren't because the system is so heavily regulated and still married to outmoded ideas.
fourstar 16y ago
It's about time they put to use all that information they've been hoarding. I'm excited.
marcamillion 16y ago
Am I the only one concerned that Google is acting more and more like Microsoft? Initially it was courting Groupon, and no doubt got a chance to dive deep into the bowels of the beast - and got a no holds barred look into their business and books, and because they got rebuffed or the deal fell through, they now take that knowledge and build a competitor. This not the first time either. If I am not mistaken, that's how Google Buzz came about. They wanted to buy Twitter, kinda went through the same process (if I remember correctly) and then when it fell through launched their own version. I, for one, am no fan of copycats - but competition is good. It keeps Groupon honest. Kinda concerns me, though, that Google has become more bare-faced with this type of action. Still a google fan though, and won't be migrating my gmail and Google Apps accounts any time soon. Just saying!
fookyong 16y ago
Anyone who thinks Groupon has been caught off guard here - I highly suspect this was part of the preliminary due diligence process in order to get the $6 billion figure on the table when the offer was made. In fact it seems like it would have been one of Google's bargaining chips to get a better price. "We offer $6 billion - you'd probably better take it because our BATNA is to launch Google Offers in Q2 2011..."
Eliezer 16y ago
Is it just me or does Google seem to be really bad at acquisitions and/or executing this sort of competitor-cloning operation? I don't know if they're below-average, but it seems that a year later, nothing you read about them doing has ever worked out. Except maybe Android.
- ry0ohki 16y ago
  They seem to bat maybe .200 with successes, but the thinking here is probably "Why not?". It costs them almost nothing, takes very minimal effort, and at worst creates another revenue stream for Google.
- emmett 16y ago
  Google Maps was a successful acquisition/competitor clone. Google Finance is also successful (a clone of Yahoo Finance basically). Those are the only two others I can think of off the top of my head. I don't think Google is particularly below average here though; I think it's just a risky strategy to clone something. You often miss a critical non-obvious piece of the puzzle, because only the surface of the business is visible when you're copying it.
  - pardo 16y ago
    Other acquisitions that I would call successful (at least from user adoption point of view): * Picasa (Picasa - Jul 2004) * Google Earth (Keyhole Inc - Oct 2004 ) * Analytics (Urchin Software Corporation - Mar 2005) * Youtube (YouTube - Oct 2006) and probably many others from this list: http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google
theklub 16y ago
I really feel like there is a coupon bubble. Business's can't carry on these deals forever can they?
jessriedel 16y ago
I think I saw a very interesting economic analysis behind what Groupon does posted here on HN awhile back. These type of offers supposedly solve certain coordination problems, but I can't remember who captured most of the surplus: the public, businesses, or both. Anyone have a link?
Kadrith 16y ago
I'd like them to integrate the business management portion into Places. That would give companies more reason to create a Places page and keep the information current. Then I'd create a mobile application so that coupons and management could be done from phones or tablets. This would help with the small business that doesn't have a computer or internet beyond CC processing. I think the consumer side of this should just be a way to redirect people to the Places page of a business and highlight the coupon that business has available.
genieyclo 16y ago
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149 points by jamesjyu 16y ago

il 16y ago

This create a really interesting dilemma for Google. A significant portion of Groupon's subscriber base comes from the Google Ads they are running. Now Google can either: 1. Ban Groupon from advertising on AdWords 2. Use the CTR and conversion data from Groupon's campaigns to learn exactly how to target ads for Google Offers. Since they have massive amounts of data from Groupon's campaigns, it's definitely feasible for them to capture lots of their traffic. But will they really run Google Offers and Groupon ads next to each other?

marquis 16y ago
This brings up an interesting question - what are the ethics involved in Google having exceptional access to market data in the area it competes in?
- patio11 16y ago
  You mean like, say, search or cost per click advertising? Google routinely uses it's position as market maker in search and Internet advertising to gain an advantage on other participants on the Internet. Take AdWords. Many smart people, including many people on HN, think that AdWords is an auction. AdWords is not an auction. AdWords has a price discovery strategy which is partially auction-like, but the actual ad displayed will be a) from whomever Google darn pleases at b) whatever price Google darn pleases. (In addition to being best at the world at processing large amounts of information, Google isn't too shabby at PR, so they call this Quality Score and tell people that the revenue maximization strategy for the world's largest advertising firm is in people's best interest... and people believe them.) In addition to displaying explicit preferences for particular businesses and for/against particular business models, Google uses large amounts of proprietary black magic to determine minimum pricing. For example, keywords in a field known to be awash in money with no competition will not be priced at the systemwide minimum price, but will rather be priced much higher. The exact level is, again, wherever Google darn well pleases. They have teams of very smart people working on revenue maximization. I love AdWords. It's the best idea any corporation has come up with in the last twenty years, and is largely responsible for me being at my kitchen table right now instead of being miserable in my cubicle. But let's not kid ourselves: Google is not a one-off gentle giant surrounded by 499 for-profit corporations on the Fortune 500.
  - yuhong 16y ago
    Well, it is a gentle giant compared to many other big companies out there.
chrisaycock 16y ago
Google can just claim #2 as a natural competitive advantage. (It's like if Apple were to build an OS-level feature that competes with an app.) Option #1, however, could get Google in trouble for anticompetitive behaviour.
robosox 16y ago
These are exactly the kinds of questions that the "don't be evil" motto is supposed to answer. That phrase has been flung around over the years by people who get angry at Google for this-or-that, but during the time I worked there, I found that the most common internal usage of the phrase spoke directly to ethical dilemmas like this. I have a feeling they've kept that in mind while building this product.
patrickaljord 16y ago
They'd be sued for doing 1. plus it's unlikely given that they accept Bing which is an even more direct competitor. 2. is probably illegal. Don't think it's worth it for google to put itself into so much trouble.
- chrisaycock 16y ago
  Is #2 really illegal? What's to stop Wal-Mart from analyzing sales receipts before deciding which store-brand product to introduce next?
  - jbooth 16y ago
    Not exactly equivalent.. Wal-mart's a distribution channel, Google's more of a marketing channel. Although it gets fuzzy.
  - greendestiny 16y ago
    I doubt it, but maybe if they did explicitly use Groupon's data directly from their campaign. If they just look at searches and clicks then all that data is surely theirs to use.
  - gojomo 16y ago
    If it's illegal, I suspect it's only indirectly so, by some roundabout after-the-fact fair-trade-practice or antitrust analysis, based on Google's dominance of search advertising. Which means: very arguable and not much of an up-front deterrent for a motivated competitor. In their privacy policies – which concern 'personal information' with far more legal sensitivity than aggregate ad/transactional data – Google pretty much grants themselves carte blanche to "combine the information you submit under your account with information from other Google services or third parties in order to provide you with a better experience and to improve the quality of our services" and/or "Provide, maintain, protect, and improve our services (including advertising services) and develop new services".
- elvirs 16y ago
  it is phony practice though it will be really hard to prove that certain decisions made by Google were based on analysis of AdWords data from Groupon campaigns.
bradly 16y ago
> Now Google can either: 1. Ban Groupon from advertising on AdWords 2. Use the CTR and conversion data from Groupon's campaigns to learn exactly how to target ads for Google Offers. Umm.. Are those really Google's only choices?
- jessriedel 16y ago
  I think he means that Google can either ban or not ban Groupon from AdWords. If the latter, than #2 becomes possible.
taylorbuley 16y ago
I see Groupon ads all day. Any guesses on how they might rank in terms of overall AdWords accounts?
- il 16y ago
  According to our data they're in the top 10 largest AdWords advertisers, at least by reach.
rokhayakebe 16y ago
What about slapping that on their homepage or search result page?
cristinacordova 16y ago
Google has never banned advertisers they compete with. You'll see ads for Bing, Yahoo etc. in Google Search all the time.
- patio11 16y ago
  Google is the world's largest affiliate and the world's largest search arbitrageur, and they ban affiliates and search arbitrageurs all day long. This is so that they capture a larger portion of advertising spend and do not leak it people who they believe do not add value. (Google is an affiliate: they do cost-per-action advertising on behalf of customers. Google is a search arbitrageur: they have a large source of searches which they can acquire cheaply, a large number of pages with content which is not quite responsive to user needs, and advertisers who are willing to pay for targeted traffic. The difference between Google and other search arbitrageurs is that typically the arbitrageur outsources the search engine and owns the content, where google owns the search engine and outsources the content to its AdSense partners.)
  - ntoshev 16y ago
    You can redefine anybody's business to look like he is competing with anyone else. The point is, those Bing and Yahoo ads still run on Google, so maybe there is some other reason for banning some affiliates, eh?
  - jongraehl 16y ago
    Key difference: Google's "search arbitrage" is consensual (explicitly requested or permitted by all parties, assuming robots.txt is honored).

adityakothadiya 16y ago

Ok, help me understand this - if Google really wanted to get into this business, and if they couldn't acquire Groupon, then why didn't they try to acquire Groupon clones like LivingSocial, and many more? What could be rational behind starting from scratch?

deleted 16y ago
[deleted]
oniTony 16y ago
After Amazon's investment into LivingSocial, the valuation shot into "over $1 billion" http://techcrunch.com/2010/12/02/livingsocial-confirms-175-million-amazon-investment/ http://techcrunch.com/2010/12/02/livingsocial-confirms-175-m... but controlling only 8% of the market, vs Groupon's 79%. It would have been a very expensive acquisition. For everything else near 0% market share, Google can probably easily get ahead on its own brand name.
elvirs 16y ago
Google acquires mainly technology and talent, or in some cases it would pay big bucks to acquire marketshare. There is not much technology behind group buying things. And none of the Groupon competitors have the marketshare Google wants. Thats why it makes more sense for Google to spend that billion dollars on advertising/promotion etc. to gain probably more marketshare than getting LivingSocial's 10% or whatever.

Kilimanjaro 16y ago

Try google.com/offers and you get a different 404 than if you typed offer, deals, coupons, etc...

idm 16y ago
Good catch. Furthermore: curl -v http://google.com/404 results in this HTTP header: Server:sffe Whereas: curl -v http://google.com/offers results in: Server: GSE So they're obviously proxying from a totally different subsystem.

chanri 16y ago

With the 200+ million gmail email addresses that Google has access to, Google can instantly become a major competitor to Groupon & LivingSocial assuming a certain percentage of gmail users agree to try it. It seems that each large internet company has its own deals site now: Google with Google Offers, Amazon with LivingSocial, eBay with Groupon, and Facebook seems to be developing its own type of daily-deals advertising. I wonder what Apple and Microsoft will do. Both of them probably have something in the works....

Joakal 16y ago
I have several gmail addresses. Don't fall for the number hype.

elvirs 16y ago

Goopon?

shadowfox 16y ago
Goopun :p

zoomzoom 16y ago

Google has enough publicity power and local business relationships (AdWords, Places) that they will have less trouble than anyone else signing up businesses to be part of the deals. Probably even FB. Then, they also have their ad network and services (gmail, search, maps, etc) to sign up users and promote offers. This is 2 good solutions for problem #1 for a local business deals network. Google is making a smart move. Most of the bigger deal sites share an uncanny similarity - they are called "clones" for a reason. And the way to stand out is to offer better deals. I have gotten the Groupon newsletter since they came to NYC, and I have never bought a deal. And I am usually a very compulsive shopper. There is not enough variety and nothing is that compelling. The way to stand out is to target deals better so you can make money on margins instead of volume and offer more lucrative deals for businesses. FB may have as much data, but Google has shipped better big-data targeting than anybody else. You need to acquire, sort, and analyze the data, and then have the relationships to exploit your insights. And as location, purchase history, and timing come into play, the data is going to get big if you want to target deals well.

CurrentB 16y ago
This. The notion that Google would even need to resort to low brow tactics other people are mentioning (like snooping on Groupon advertising data or banning them outright) are pretty absurd, obviously immoral and completely unnecessary for this to work. I've also been a Groupon member and after not seeing anything compelling for awhile I'm starting to dismiss it as spam. Google has a ton of users on the business and consumer end, and a ton of public trust despite all this recent rambling. For the price they were going to pay for Groupon they can make this work. They will be able to attract offers that can appeal to a wider audience do to their sheer volume of their current business clients who are already earning solid ROIs advertising from Google and could easily be enticed to give this new Offers thing a try.
daveambrose 16y ago
"And as location, purchase history, and timing come into play, the data is going to get big if you want to target deals well." Data, especially at scale, is extremely powerful in this business: http://techcrunch.com/2011/01/11/why-we-invested-in-groupon-the-power-of-data/ http://techcrunch.com/2011/01/11/why-we-invested-in-groupon-... The one question I continue to have in a situation like this is the "bytes v. beings" approach. Self-service is very compelling and certainly the "holy grail" of local advertising, but more often than not, the onramp to Google for small business is AdWords and that's hard, really hard to understand for a small business owner. I'm not sure if the small business owner is really reading through Google's AdWords University documents and watching the YouTube videos. You're going to need people to sell to people and not just bytes on a screen. The salesforce, in the immediate term, I feel is the largest initiative Google needs to take on. Demand will always be there, especially across their widespread network. Just get the best merchants (note: quality of the deal is still important in large markets like NYC) and perfect the sales process.

iantimothy 16y ago

It seems to me that with this launch, Google has become more like Microsoft when Google was gaining some sort of ascendancy - a juggernaut that is so afraid of the upstarts that they chase the shadows of the next big thing, in this case Groupon. The local search & commerce space cannot possibly only look like Groupon. On Hacker News, we have seen people try different models & different variations. There are some ways that doesn't even rely on deals. Just yesterday we saw http://getpunchd.com/ http://getpunchd.com/ a mobile play on loyalty schemes. And Google has Android, a mobile OS coupled with what was once and possibly still the best mapping site on the web. It would seem figuring out how those two combined can be the wedge into the local space should be their priority instead of being scared into creating a clone.

robryan 16y ago
They tried to buy groupon, having that fall through doesn't it make a lot of sense to create a business doing the same thing you were going to do with groupon? These deals are embraced by a large number of people, why try and innovate into a new model that regular people don't get or like when there is already a perfectly good one out there with heaps of traction.
- ScottBurson 16y ago
  Except that Groupon is a "people business", with lots of sales and support staff. This is antithetical to Google's culture. I'm not at all sure Google is going to win this battle. Will be interesting to watch.
  - cristinacordova 16y ago
    Google has plenty of salespeople as is and has bought plenty of companies with a large number of salespeople (Doubleclick/Admob). They were also willing to take on Groupon's thousands of salespeople with the $6B offer.
    - notahacker 16y ago

elvirs 16y ago

'With its vast reach, huge resources and brand recognition, it could prove to be a powerful player in the space.' Yeah, just like it did with Buzz. Though this time it actually has more shots at it.

ssclafani 16y ago

The logo, maybe: https://www.google.com/images/logos/offers_logo.gif https://www.google.com/images/logos/offers_logo.gif

greendestiny 16y ago
Wow that's ugly. I don't know if the Google brand is the best thing for them to use here, maybe they could have bought a lesser Groupon competitor and kept their brand. It seems from the outside that Youtube is one of Google's most successful purchases because they kept it a little separate.
- mortenjorck 16y ago
  "Goopon" somehow just didn't feel right.
deleted 16y ago
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elvirs 16y ago

One of the reasons Google may fail at this is the support call center. Groupon has large and professional support call centers that around the world that takes care of customer inquiries, something very distant to Google culture

knowsnothing613 16y ago
IT's called outsourcing for a reason.
- elvirs 16y ago
  zappos does not outsource that for a reason.

olalonde 16y ago

IMHO, they will crush Groupon if they execute well. Groupon is still relatively unknown outside tech circles.

didip 16y ago
Nah, I wouldn't be too sure about it. They haven't even kill Facebook or Twitter yet.
- Charuru 16y ago
  They didn't clone Facebook or Twitter?
  - brownleej 16y ago
    I thought that was the point of Orkut and Buzz.
    - philwelch 16y ago
      Orkut may not have predated Facebook, but it predated the wide spread of Facebook--as I recall, I was able to use Orkut before Facebook expanded to my college.
- deleted 16y ago
  [deleted]
- petervandijck 16y ago
  Groupon doesn't have network effects to protect it.
mlinsey 16y ago
FWIW I was introduced to Groupon by two people far removed from of tech circles. When I first tried it, it didn't even really occur to me that I was looking at a hot startup. I think its mindshare is plenty good among non-tech people in urban areas.
16y ago

izak30 16y ago

Lesson: Don't turn down an offer from Google. They buy because they want in the space.

code_duck 16y ago
This behavior is essentially what Microsoft did from 1985-2000. Companies that turned down offers saw their software cloned within 2 years, and sold at a discount or bundled with other MS products.
- loewenskind 16y ago
  Exactly. I can't wait until some YC companies start being at the receiving end of this behavior so the insane level of Google worship on this site can finally go away.
- petervandijck 16y ago
  Classic embrace and extend (or embrace and make cheaper).
brown9-2 16y ago
I wouldn't be so quick to cede things to them. How many other areas have they entered recently and killed, especially ones that are fundamentally non-technology based?
- izak30 16y ago
  Sure, that all depends on what you want out of the business.

drivebyacct2 16y ago

It'd be interesting if they incorporated this well with their NFC work they're doing with Android.

gregable 16y ago
I'm curious, how would you imagine that working?

knowsnothing613 16y ago

This is just the beginning. Google will offer local business bundled QR services. Imagine walking up to a restaurant window. snapping a QR photo, or google goggling, and having the menu displayed on your android, and maybe offers you a daily deal. Google wins in mobile, and entrenches itself into the local ad space. Can Apple Do this?

aaronbrethorst 16y ago
Wouldn't that be the same restaurant window that already has a menu mounted on it?
- jeremydavid 16y ago
  That made me smile :) "Look at this brilliant technology. Just take a picture of this symbol and your phone automagically translates it into list of specials and prices!" "Why don't they just put up the menu/specials?" "oh..."

speby 16y ago

Classic Google. First they try to buy Yelp.com and that fails, so they build Google Places (TBD if that turns out to be more successful). Now they tried to buy Groupon and failed and now they're potentially creating a clone of that instead. I guess these are classic examples of Build vs Buy.

trotsky 16y ago

Update 2: We’ve also learned that Google will pay out 80% of a business’ revenue share three days after its deal runs. Google will hold the remaining 20% for 60 days to cover refunds before sending the rest. This is a pretty significant piece of the news. With groupon famous for its slow payment terms, 3 day terms may look very attractive. Cash flow management is a big portion of running many small/local businesses and with most of their vendor terms from 7-30 days the 30+ day delivery from groupon can turn a big success into a big problem. This sounds like a great sales differentiator for them. Even if google doesn't get significant traction out of the gate, if this forces groupon to abandon their aggressive floats it could have a real effect on how good their financials look leading up to an IPO. Imagine if Google was willing to take a significantly lower revenue share on the deals to gain market share. A big reason everyone is so breathless about the business model is how crazy the margins are. If google was willing to throw a significant amount of the $6B offer price at a promotional pricing structure they could seriously slow down the rate that the competition expanded markets.

hop 16y ago
If the businesses were worried about cash flow, I think the 75% haircut would be the bigger issue. Also, they will likely be pre-paid for a large percentage of their Groupon patrons (I have many I haven't used from months ago) and not everyone ends up using their coupon. Businesses flock to Groupon because its popular and puts them in the spotlight for a day to tens or hundreds of thousands of local people on their mailing list and twitter followers.
- petervandijck 16y ago
  Mmm, I think you misunderstand cashflow. It's not how much money you make, it's how fast you get it.
petervandijck 16y ago
Let's say they spend not 6 but 1 billion dollars to make this work, over the next 3 years. That means they can spend 1000000000/365/3 = 1 million dollars a day on providing awesome deals, for 3 years. Don't tell me that won't work.

DevX101 16y ago

Newspapers and other local advertisers will be a take a big hit while the Big G's battle it out.

netcan 16y ago

If I were a Google investor I would be watching this very closely for two reasons: a- See how Google overcome their issues in dealing with customer service and related things. They'll need to get better at this stuff at some point to have the widest possible scope for trying new things. b- See if they can pull off another extension of their core business. Adwords is the ultimate small business advertising platform and Groupon is another part of that world.

ramonRecuero 16y ago

Groupon is going to face a lot of competition these next months. Now Yelp is offering some similar deals related with food....

davidedicillo 16y ago

I wish they were focusing more on improving their search engine than jumping in any possible business...

FirstHopSystems 16y ago

I wonder when Groupon will become a verb for falling out of relevance due to one trick pony/smarter competition. I guess MySpace'ed or Yahoo'ed never caught on. OMG Ponies!!!!1!!

cft 16y ago

I wonder if there is any casual relation between Google's failure to acquire Groupon and removal of Eric Schmidt from CEO...

ck2 16y ago

I for one welcome more group-deal sites, I think we all win, as long as they are reputable. I wish however Google instead had taken on PayPal more directly and more intensely and even make an ebay competitor (google base will never be ebay or even craigslist). PayPal/Ebay is rolling in profit, I am not sure why Google doesn't want some of that.

InclinedPlane 16y ago
eBay is certainly an aging service. It has had very few significant feature changes since perhaps 1998 or so. However, it does have a fair amount of competition (amazon and craigslist being the best examples). Most of the competition for eBay comes in the form of catering better to particular segments of the market. Craigslist caters more to the yard-sale segment (timeliness, locality, and just-getting-rid-of items being more important than maximizing revenue or selling/buying niche items). Amazon caters to small, niche sellers (people selling lots of used books, or trans-shipping medical supplies, etc.) More competitors will come along targeting more and more segments of eBay's current market. Paypal is a different story. It's a very much harder business on the fundamentals. One of the world's largest financial institutions which has grown up in the blink of an eye and faces problems on a scale that no other bank in the world faces. Criticism of paypal is often fair, but sometimes it's ungrounded from perspective (of the "garsh, why don't these piece of junk hover-shoes work right?" variety). The real criticism should be toward our archaic banking systems and regulation. The services that paypal offers should ideally be built into any old bank account, but they aren't because the system is so heavily regulated and still married to outmoded ideas.

fourstar 16y ago

It's about time they put to use all that information they've been hoarding. I'm excited.

marcamillion 16y ago

Am I the only one concerned that Google is acting more and more like Microsoft? Initially it was courting Groupon, and no doubt got a chance to dive deep into the bowels of the beast - and got a no holds barred look into their business and books, and because they got rebuffed or the deal fell through, they now take that knowledge and build a competitor. This not the first time either. If I am not mistaken, that's how Google Buzz came about. They wanted to buy Twitter, kinda went through the same process (if I remember correctly) and then when it fell through launched their own version. I, for one, am no fan of copycats - but competition is good. It keeps Groupon honest. Kinda concerns me, though, that Google has become more bare-faced with this type of action. Still a google fan though, and won't be migrating my gmail and Google Apps accounts any time soon. Just saying!

fookyong 16y ago

Anyone who thinks Groupon has been caught off guard here - I highly suspect this was part of the preliminary due diligence process in order to get the $6 billion figure on the table when the offer was made. In fact it seems like it would have been one of Google's bargaining chips to get a better price. "We offer $6 billion - you'd probably better take it because our BATNA is to launch Google Offers in Q2 2011..."

Eliezer 16y ago

Is it just me or does Google seem to be really bad at acquisitions and/or executing this sort of competitor-cloning operation? I don't know if they're below-average, but it seems that a year later, nothing you read about them doing has ever worked out. Except maybe Android.

ry0ohki 16y ago
They seem to bat maybe .200 with successes, but the thinking here is probably "Why not?". It costs them almost nothing, takes very minimal effort, and at worst creates another revenue stream for Google.
emmett 16y ago
Google Maps was a successful acquisition/competitor clone. Google Finance is also successful (a clone of Yahoo Finance basically). Those are the only two others I can think of off the top of my head. I don't think Google is particularly below average here though; I think it's just a risky strategy to clone something. You often miss a critical non-obvious piece of the puzzle, because only the surface of the business is visible when you're copying it.
- pardo 16y ago
  Other acquisitions that I would call successful (at least from user adoption point of view): * Picasa (Picasa - Jul 2004) * Google Earth (Keyhole Inc - Oct 2004 ) * Analytics (Urchin Software Corporation - Mar 2005) * Youtube (YouTube - Oct 2006) and probably many others from this list: http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google

theklub 16y ago

I really feel like there is a coupon bubble. Business's can't carry on these deals forever can they?

jessriedel 16y ago

I think I saw a very interesting economic analysis behind what Groupon does posted here on HN awhile back. These type of offers supposedly solve certain coordination problems, but I can't remember who captured most of the surplus: the public, businesses, or both. Anyone have a link?

Kadrith 16y ago

I'd like them to integrate the business management portion into Places. That would give companies more reason to create a Places page and keep the information current. Then I'd create a mobile application so that coupons and management could be done from phones or tablets. This would help with the small business that doesn't have a computer or internet beyond CC processing. I think the consumer side of this should just be a way to redirect people to the Places page of a business and highlight the coupon that business has available.

genieyclo 16y ago

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