Yesterday, Google announced another important acquisition which is much smaller than the Motorola one but still might become a critical part of its future. I still think that along with “Search”, “Social” and “Mobile”, “Local” is a critical part of Google’s future and one where it will compete with companies such as Facebook, Yahoo and Yelp among others. There will be many challenges but Google is already in a great position thanks to its maps, its local targetting for search, its recently launched and still expanding “Google Offers”. Can Google pull it off? It sometimes seems as if Google was trying to make sure that we never had to leave its properties.
What Zagat Will Become
One very interesting thing that happened following the announcement was that OpenTable (OPEN) tanked losing nearly 10% in the minutes following the acquisition. Why? Clearly, I wasn’t the fastest guy around as I had not instantly thought about it but many did link the two. If Google users are search for places to eat or reviews on Google or through their phones, why not offer them an additional service; helping them make the actual table reservation. Sure OpenTable might offer the same service,, but since most users do start their search on Google, getting to OpenTable does require an additional step. To be clear, Google has not yet hinted it would be doing this but I think it is the logical next step. After all, if Google’s ITA acquisition was made in order to offer users the posssibility of searching and booking travel deals, there is no reason for Google to not take that step for restaurant orders as well. Open Table would have cost a decent amount as the market is currently over $1.3B even after the decline while the Zagat acquisition is said to have cost less than $66 million.
Is Google Going Too Big?
The big question when I think about Google is how much it is sporeading itself as it gets involved into an always increasing number of activities. One issue with that is that Google is getting an increasing amount of attention from legislators that are looking into Google’s near search monopoly and how it’s using it. Another is that Google is battling out in so many spheres that it becomes difficult for Larry Page to truly focus on priorities such as social. However, as it battles with Facebook, Apple and others that are also becoming bigger, I don’t think Google has any choice to continue to expand.
How Significant Is This For Google’s Stock?
By itself, I think it’s a non factor really and I would not change my opinion of the stock based on this acquisition, I already do love the stock. However, this certainly reinforces my view that a Larry Page led Google is a much more aggressive and risk taking company that ressembles what Google used to be a few years ago. That is certainly very positive. I like the pro-active attitude. The next acquisition that I would like to see is something in the lines of getting more users to “connect” to Google+. A gaming company would be one way to do it, interesting apps, etc.
What are your thoughts on Google buying Zagat?