Google buys DoubleClick for $3.1 billion

Couple of years back when my brother interviewed for Google, the interviewer asked him whom did he think Google’s biggest competitor was. The popular answer back then was Yahoo! because of their intense competition in developing web services (search, photos, video, etc.) But my brother instead mentioned Microsoft because he envisioned that Google was aiming higher and would be better off branching out into online software apps and other revenue-generating streams. His response was vindicated when couple of months later, Google kicked off their MS Office-competing apps like acquiring Writely and developing Spreadsheet.

However, Google’s main focus remained on advertising options. Before they introduced contextual ads, they were merely a search engine albeit a popular one. But monetizing their search results gave them billions to play around with in the World Wide Web. After acquiring YouTube for $1.16 $1.65 billion last year, they plopped down $3.1 billion for DoubleClick, an online advertising firm – the largest ever acquisition for Google.

For Google, the purchase is another step in its transformation from a search engine into an advertising powerhouse. DoubleClick, which is based in New York City, specializes in software for display advertising and has close relationships with Web publishers, advertisers and advertising agencies. Google, for all its outsize reputation, has made most of its money in the online basics: the text-based search engine and small text ads that are like the Yellow Pages of the online advertising. DoubleClick’s strength, by contrast, lies in flashy banner ads and, more recently, video ads that are more like high-end magazine or television ads.

So maybe now Google will have some flashy jumping monkey ads to their credit (I hope they change that though). But more than expanding their niche in advertising, Google’s main objective in this deal was to outbid Microsoft which also was interested in DoubleClick. Although Microsoft has larger cash reserves, Google was able to outbid them. Steve Ballmer must be wrecking some office right now.

So what’s next in Google’s world domination plans?

4 Comments

  1. Steve Ballmer must be wrecking some office right now

    — That is, if that itself was not the idea of Microsoft :). Just because Google outbid Yahoo and Microsoft should not be an indication that Microsoft or Yahoo did not think it through, especially Microsoft :).

    Unless Google builds a OS, they are never going to challenge Microsoft and their world domination; the media of course would love otherwise, but truth of it is Google has not proved itself beyond mail, search and adsense.

    S

  2. Suyog,

    That is true that Google cannot overtake Microsoft any time soon but they are making a dent in their reputation which was associated with being an innovator in tech field. Just like IBM was eclipsed by Microsoft in the 70-80s, I feel Google is doing the same to Microsoft. Microsoft may have a grip on the OS market but I think the future lies in who controls the Internet.

  3. I guess the youtube acquisitions was worth $1.65 billion .. you mention it as $1.16 billion .. neways u didnt disclose if ur brother made in through the google interview ..

  4. Gurinder, you’re right! Fixing it now. And nope, my brother didn’t make it through to Google. Probably him not having a PhD might have been one issue :)

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