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Google eyes more big money takeovers

By Reuters and Simon Aughton

Posted on 11 May 2007 at 08:32

Google has become more comfortable doing big acquisitions but still sees small technology deals as its primary thrust for buying businesses, its chief executive said on Thursday.

Eric Schmidt told reporters at a briefing at Google headquarters that the Web search leader remained open to buying larger companies, as it has done twice in recent months, but that these were meant to plug holes in businesses.

'We are more comfortable now than we were a few years ago to buy real businesses,' Schmidt said in response to a reporter's question ahead of the company's annual shareholder meeting. 'But we are not doing it for competitive reasons. We are doing it because it is part of building out a portfolio.

'So I think the pace will accelerate, but it is not a fundamental shift and we are not going to do it every day,' he said of the company's willingness to entertain larger deals.

He also ruled out taking part in the wave of consolidation sweeping the news media business.

Google paid $1.65 billion to acquire video-sharing site YouTube in November, its biggest deal at that time. Then, a month ago, it announced a $3.1 billion deal to buy DoubleClick, which offers advertising delivery technology and services.

Schmidt said that the company continues to view small technology acquisitions as the bread-and-butter of its merger strategy, mainly as a way to obtain new technology and talented engineers.

'In the past, we would buy businesses in lieu of hiring engineers,' Schmidt said. These days, Google buys a start-up once every few days, or around one a week, he estimated.

Two examples of this approach - Keyhole, which spawned Google Earth, and Urchin, which became Analytics - had strong technical teams, a technology head start, and were bought relatively inexpensively in the hopes of later generating billion dollar revenue streams, he said.

The company filed with US antitrust regulators last week for approval of the DoubleClick merger and expects an initial response from officials in around three weeks, Schmidt said.

He intimated that future acquisitions may be made to strengthen the applications side of business, notably Google Apps, its online suite of office tools.

Noting that people are spending more and more time online, he said that 'Google can bring some of these new applications that really matter to them'.

Google should not longer be thought of as merely a search company, he said, adding that the company's new corporate tagline has become 'Search, Ads and Apps'.

Surrounded by reporters ranging from Ken Auletta of The New Yorker to Michael Arrington of Silicon Valley blog TechCrunch, a Financial Times reporter asked the Google CEO if he would acquire a news organisation like Dow Jones, publisher of the Wall Street Journal, currently the subject of takeover interest from Rupert Murdoch's News Corp.

Schmidt said no. 'We made a decision to focus primarily on user-generated content, and not on businesses where we would own the content,' Schmidt replied to reporters.

He was reiterating Google's oft-repeated stance that it sees itself as a technology tools maker, not a media content owner.

Schmidt said Google was better off partnering with companies that produce news and other content, rather than buying them.

'It is better to partner with Dow Jones and the Financial Times...,' Schmidt said. Blogger Arrington jumped in to add .'..and TechCrunch.'

Schmidt rolled his eyes and replied: 'Yes, yes, yes ...and the San Jose Mercury News,' acknowledging a reporter for Silicon Valley's main local newspaper.

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