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Is ‘Google Offers’ A Groupon Killer?

Friday, 21 Jan 2011 | 12:52 PM ET

Google tried to buyGroupon for $6 billion, and Groupon turned the search giant down. So now Google's moving forward with its own rival service, called "Google Offers,"which would offer consumers deals from local merchants.

There's no question this arena is hot — Groupon just raised $1 billionand has 50 million subscribers, while the number two rival, LivingSocial, has 17 million. Now we'll see whether Google can leverage its size and technical expertise to create a real player in the space.

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Here's all Google will say about its new product in the works: "Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted."

Google Offers could draw on various local-oriented products the company has right now. Google's "Place pages" created for small businesses allow local businesses to advertise around that profile. Hotpot is similar to yelp, allowing users to post business reviews and find suggestions. Google has also been interested in using your location on your mobile device to better target ads. And of course there's Google Checkout, which allows users to compare products and shop online. Now there are reports that Google's working on a technology to allow consumers to pay for products using their mobile device.

Location-based services, retail, business reviews. All of these components could easily fit into a Groupon-style service. The big question is manpower. Google's products — like search or Gmail — tend to be technology-driven. Groupon employs 1,000 people, many of whom are on the phone with local businesses or selecting among deal offers. Does it make sense for Google to invest in a business that demands so much hands-on attention? We'll see how they end up approaching it.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.