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Google's Groupon groping reveals the shifting power in the web world

December 4, 2010: 2:09 PM ET

First Yelp, now Groupon: Why hot startups -- especially those holding the key to "local" -- keep slipping through the search giant's fingers.

Eric Schmidt in Buenos Aires, Argentina, durin...

Image via Wikipedia

While the official confirmations have yet to land (and my colleague Dan Primack is following up on Groupon CEO Andrew Mason's hopefully tongue-in-cheek offer to discuss the finer points of his affection for miniature dollhouses), it's looking like talks between Google and Groupon have fallen apart. The situation is eerily reminiscent of Google's (NASDAQ:GOOG) talks with Yelp, just about a year ago. Google, thought to be after Yelp's ground army of local sales teams, now stretching across much of the U.S. and Canada and some European countries, either got cold feet, or got a cold shoulder from CEO Jeremy Stoppelman, and returned him the favor.

Maybe it's something about the holiday season that leaves Eric Schmidt wishing the company had a killer local business offering up its sleeve, but whatever the case, that marks two failed acquisitions of social or local-oriented startups. (His successful 2005 acquisition of Dennis Crowley's Foursquare precursor, Dodgeball, came at a different time in tech, and anyway, Google ended up shutting it down and alienating Crowley.)

It's worth noting that Yelp was, according to reports, in talks to be bought for three quarters of a billion dollars. The bidding for Groupon, a site by all accounts offering far less sophisticated technology, was said to have reached $6 billion, including various retention incentives for Mason and other top executives. Social and local are not getting any less valuable. More

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