The Wall Street Journal reported that “reliable sources” are stating Groupon is close to paying as much as $6 billion for Groupon. The reliable sources are probably bankers representing Groupon. However, as noted yesterday, even a price of $3 billion makes no sense to us. Google controls the flow of the vast majority of website visitors, has tremendous management talent and over $33 billion in cash. Why would they use $6 billion in cash (or even stock) to acquire a business which has no sustainable advantage should Google decide to pursue its own proprietary solution? Time will tell, but with so much chatter there is probably some validity to the rumors. It would be a mistake to see Google buy Groupon at the kind of prices people are talking about.

Lots of people seem to think that Google will buy Groupon but why would Google do that? Groupon offers no cutting edge technology, no critical mass, no insurmountable brand awareness and not much else that Google couldn’t replicate for far less than the talked about $3 billion purchase price. For pocket change, Google could form a Groupon Clone team, use its existing sales force (or create another one), integrate the advertising avenue into Adwords and then steer tons of traffic from the search engine to its own propertietary property. I’m no genius, but it would seem fast, easy and less expensive than paying $2 or $3 billion for Groupon. If Google buys Groupon, it would be a sign that they can’t find a bank big enough to keep all their cash because it wouldn’t make much sense to us.