Groupon was silly not to accept Google's $6bn offer. The profit margin that justified that valuation is sure to drop over time, as their business model is easi

Groupon was silly not to accept Google's $6bn offer. The profit margin that justified that valuation is sure to drop over time, as their business model is easily replicable. Does that mean Groupon or that business model is going to go away? Of course not. It does mean, however, that $6bn was probably the high-water mark for the valuation a company like this can achieve. The biggest threat is not from the consumer side - who wouldn't love 50-75% off deals? - but from the business side. Rumor has it that business are losing anywhere from 75-90% on these coupons. Businesses will accept a loss leader now and again, but there are two threats here: 1) Competitors will offer businesses better deals by taking less as a middleman fee, hurting Groupon's profit margin 2) There will be few repeat customers on the business side, as Groupon purchasers don't actually return to the businesses based on the initial discounted deal Both threats are serious.