Google is reportedly in talks with Groupon, a local coupon service, in a deal that would be pricey, but fit in well with the search giant.
According to BoomTown's Kara Swisher, Google may be offering well above the $2 billion to $3 billion Yahoo offered. Swisher has a lot more on the deal itself, but let's fast forward a bit.
Why is Groupon such a hottie to Google?
For starters, Google is already in a position to be a local commerce gatekeeper. Say you have a local restaurant in Newtown, PA. It would be wise to have a few Google keywords acquired. You also want good integration with Google Maps too. Of course, you monitor your reviews and what not on Yelp and other services, but Google is your local yellow pages in many cases.
Now let's layer Groupon into the equation. You find that restaurant on Google, you get a nice map for directions, you get a few reviews and you can hand out a coupon for drinks or some discount. If you want a premium mashup toss in a deal of the day with Google services.
For Google, Groupon would be very sticky. And Groupon brings a dash of social networking into the equation. For Google, Groupon is another hook into local commerce and advertising---and a damn good one at that.
That local commerce hook is why Yahoo was so interested. Yahoo could take its local content partnerships and toss in Groupon. Google spins Groupon with search and plows ahead.
Swisher notes that Amazon and eBay could also be interested. EBay would make the most sense. However, Groupon wouldn't transform either company. For Google, Groupon locks down the local retail market. That's powerful enough to overpay for.
The big question is whether regulators would allow Google to buy Groupon. Every deal Google does is scrutinized and this Groupon purchase---should it happen---would probably warrant a good review.