2 Apr 2008
Google Buying Expedia? Hmm…Not really!
The stock market was buzzing yesterday about a possible bid by Google for Expedia Inc. Expedia’s stock rose 9% in afternoon trading. However, no one credible has confirmed this takeover bid, and now it seems more like an April Fools Day special.
Here is my opinion on why this deal is pure speculation and doesn’t make a lot of sense.
Why Buy Expedia?
Google typically goes into purchase mode based on 2 core needs:
1. Traffic & Popularity (YouTube, 2006)
2. Market Domination (DoubleClick, 2007)
More Traffic?
Google doesn’t need more traffic. They already sit on over 58.7% of web traffic and are not starving for search market share. Expedia brings in very decent numbers, but nothing to tempt the Googlers.
More Revenue?
No…I don’t think so. Expedia had an excellent 2007. Their gross profit for 2007 was $2.10 billion, an increase of 21% over 2006. However, AdWords powers the Google machine very well. Google grew 44% or $2.7 billion in 2007. Google’s gross profit was $16.5 billion.
More Travel?
True, Expedia is the one of the top global online travel websites, with excellent usability and a very solid support structure. They have beaten some very well established hotel brands at marketing and distribution through their technology and clear vision. But what Expedia is not is a meta search engine, and that is that is where Google should be looking to shop. Kayak.com makes more sense for Google than Expedia.
Google’s much-hyped “Google Travel” hiring in Seattle in 2006 did not really materialize into a jump into the travel vertical. I guess there were YouTube and DoubleClick to be acquired, and they never really got around to travel.
Only Google Knows
At the end of the day, despite my opinions, Google is free to make a reasonable offer to any business. Expedia is a strong and poweful buy in the online travel field. What Google does not have to worry about is the dark cloud that Microsoft brings to every buyout offer it makes (ex: people crying about its “evil” bid for Yahoo).
In the end, it is all speculation. As Cicero said: “Time destroys the speculation of men, but it confirms nature.”
