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Google sees mergers big and small; no news deals

Google sees mergers big and small; no news deals
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First Published: Fri, May 11 2007. 01 05 PM IST
Updated: Fri, May 11 2007. 01 05 PM IST
By Eric Auchard, Reuters
Mountain View: Google Inc. has become more comfortable doing big acquisitions but still sees small technology deals as its primary thrust for buying businesses, its chief executive said on 10 May.
Chief Executive Eric Schmidt told reporters at a briefing at Google headquarters that the web search leader remained open to buying larger companies, as it has done twice in recent months, but that these were meant to plug holes in businesses.
“We are more comfortable now than we were a few years ago to buy real businesses,” Schmidt said in response to a reporter’s question ahead of the company’s annual shareholder meeting. “But we are not doing it for competitive reasons. We are doing it because it is part of building out a portfolio.”
“So I think the pace will accelerate, but it is not a fundamental shift and we are not going to do it every day,” he said of the company’s willingness to entertain larger deals.
He also ruled out taking part in the wave of consolidation sweeping the news media business.
Google paid $1.65 billion to acquire video-sharing site YouTube in November, it’s biggest deal at that time. Then, a month ago, it announced a $3.1 billion deal to buy DoubleClick, which offers advertising delivery technology and services.
Schmidt said that the company continues to view small technology acquisitions as the bread-and-butter of its merger strategy, mainly as a way to obtain new technology and talented engineers.
“In the past, we would buy businesses in lieu of (hiring) engineers,” Schmidt said. These days, Google buys a start-up once every few days, or around one a week, he estimated.
Two examples of this approach -- Keyhole (Google Earth) and Urchin (Analytics) -- had strong technical teams, a technology head start, and were bought relatively inexpensively in the hopes of later generating billion dollar revenue streams, he said.
The company filed with US antitrust regulators last week for approval of the DoubleClick merger and expects an initial response from officials in around three weeks, Schmidt said.
Surrounded by reporters ranging from Ken Auletta of The New Yorker to Michael Arrington of Silicon Valley blog TechCrunch, a Financial Times reporter asked the Google CEO if he would acquire a news organization like Dow Jones & Co Inc., publisher of the Wall Street Journal.
Schmidt said no.“We made a decision to focus primarily on user-generated content, and not on businesses where we would own the content,” Schmidt replied to reporters.
He was reiterating Google’s oft-repeated stance that it sees itself as a technology tools maker, not a media content owner.
Schmidt said Google was better off partnering with companies that produce news and other content, rather than buying them.
“It is better to partner with Dow Jones and the Financial Times...,” Schmidt said. Blogger Arrington jumped in to add “...and TechCrunch.”
Schmidt rolled his eyes and replied: “Yes, yes, yes ...and the San Jose Mercury News,” acknowledging a reporter for Silicon Valley’s main local newspaper.
During the same interview, Larry Page, Google’s co-founder and biggest shareholder, repeated his belief that his company could play a role in opening up journalism to more participants.
“There is some small number doing what you do. That number is probably too small, given the impact that you have on the world and the good that you do,” he said.
“How to get more people working on what you are doing and fund those things?” he asked abstractly, pondering it like he might an interesting mathematics equation.
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First Published: Fri, May 11 2007. 01 05 PM IST
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