No time to build, so we buy: Markets moving too fast for Google

As news of Google’s attempted acquisition of the daily deals site Groupon ricocheted around the Web, one big question loomed large: Wouldn’t it be easier for Google to build a similar service than pay several billion dollars for Groupon?, reports The New York Times.

Not really, said Susan Wojcicki, a senior vice president for product development at Google who oversees the company’s advertising products. Wojcicki was one of the featured speakers on the second day of the D: Dive Into Mobile event at the Ritz Carlton Hotel in San Francisco.

“It’s hard to assemble a team and organize as quickly as you want in these situations. Finding the right people, interviewing them and hiring them takes time. Companies are willing to pay a premium to be in the market right now. You’re buying people with expertise and learning about new markets.”

The move by Google represented its interest in cracking the local advertising market, which Wojcicki said would continue both by efforts within the company and perusing the market for potential acquisitions.

There are two reasons why Google and others are willing to pay a premium to be in the market ‘right now’:

  • the leading company in most segments of the web is worth much more than the second player – these are winner takes all markets, and once the leader is established it is hard for anyone else to catch them
  • these markets are developing so quickly that large companies are often unable to start playing early enough to take a meaningful position without acquisition.

Google would have plenty of competition in a rapidly accelerating market if entering local advertising and deals, as Foursquare continues to develop its base and rival for internet dominance and Facebook recently implemented similar location-based technologies to offer its users discounts when ‘checking in’ to establishments.


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