Google’s strange acquisition practices

By March 12, 2009Exits, Google

Google has announced the launch of Google Voice, which is actually the relaunch of the GrandCentral phone management service which they acquired 21 months ago.  The service itself sounds very cool (a web portal giving you one number for all your phones, management tools to route your calls, texts and voicemails, a voicemail transcription service and a search function which indexes your texts and voicemail transcriptions – it is only available in the US unfortunately, but I would love to see it here) – but my point in this post is that the service has been in stasis for the 21 months since it was acquired.

According to Techcrunch in that time the service has been frozen to new users, has had no new features and has been subject to periodic outages.

Moreover all this was expected at the time of acquisition as the service has been rebuilt from the ground up to run on Google’s proprietary technology stack.

All of which makes you wonder whether it was worth Google’s while to make the acquisition in the first place:

  • They rebuilt the product – so I’m guessing they didn’t get much technology (I doubt there is a clever algorithm at the heart of this service)
  • They clearly didn’t value the customer base too highly
  • I’m sure they got some people, but at a rumoured price tag of $50m that can’t have been the only rationale
  • In 21 months they could probably have built the service themselves from scratch without buying the company

Combine this logic with the long list of Google acquisitions that have simply disappeared/gone nowhere (Jotspot, Jaiku, Dodgeball, Feedburner, Blogger) and you quickly reach the conclusion that going forward we might see far fewer deals from them at this scale.

  • azeemazhar

    Totally agree. When you have such a strong engineering culture, it is hard to see what you gain with these sorts of acquisitions. I don't buy the ' you get the founders', you can get the founders with the right package anyway

  • Very good points indeed. It's hard to see any synergies in a lot of Google's acquisition and even when they are, they often execute poorly afterward. In a lot of cases actually, Goggle acquisitions are defensive moves rather than an offensive ones.

  • I wonder if there would be a PR cost to Google for “copying” another startup. Take twitter for example; should google want twitter they could clearly build it relatively easy – the biggest hurdle being scalability which they know inside out. I wonder if the PR cost for doing this (they are a rare behometh of a company considered startup friendly) is not worth the relatively small acquisition costs; in this case at least if not twitter's.

  • Hi Chris – I doubt they would worry too much about the negative PR of launching competing products – after all they had Google Video before they bought YouTube. Big companies routinely decide to build functionality rather than buy it.

  • Not sure why you and Nic don't buy the “you get the founders” argument? It happens whether you buy it or not, Google had G Video before YouTube, it was easier for Twitter to buy Summize, passionate people are at the start up and if you buy the start up you get the people who can bring consumers.

  • For sure people are important but for acquisitions of companies with more than a handful of people they can only be a part of the story. Summize was tiny when Twitter acquired it.

  • People are important, but big companies have a habit of negating the entrepreneurial talents of the type of people that create startups 🙂

  • Rohitmat

    you are probably right! I have been thinking the same – what's the use of buying a start-up when you are
    – not getting a proprietary technology,
    – no established consumer base/preference
    – no added value from the 'founders'

    You Tube's acquisition was different as in spite of similar technologies, Google Video had not become as popular as You Tube. So Google had not choice but to acquire You Tube for its established consumer base


  • Nic, I was not talking about big companies in general – but Google in particular which has a rather unique brand for such a large company. Google Video is not a counter example given that it was launched *before* Youtube. Most of the new products I can think of from Google either entered crowded markets (Google Mail, Froogle) or were unique. Any market with a high profile startup – they seemed to buy instead. I am sure there are counter examples, and I am not suggesting that PR is the only reason – but I would be surprised if it didn't factor into it; a few million $ is not a huge price to pay for maintaning the “do no evil” brand.

    Personally I imagine the facebook/twitter thing has a PR affect here. Had facebook just “copied” twitter there would have been some quite heated discussion on the issue. Given that facebook offered to buy twitter but terms could not be agreed – it gives facebook a pretty good PR argument when they go ahead and recreate anyway. Perhaps facebook did want to buy twitter – but I am sure they realised having the discussion anyway would be useful if they ever decided just to do it themselves.

  • White Vinegar

    It's also buying out potential competition. So buyouts are good either way, they acquire customers and some technology. And, most likely Google and write it off in their taxes. LOL

  • White Vinegar

    It's also buying out potential competition. So buyouts are good either way, they acquire customers and some technology. And, most likely Google and write it off in their taxes. LOL

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