Traffick | Minding the Search Engines' Business

Traffick | Minding the Search Engines' Business: "The Case for Infospace + Google

Infospace's seemingly innocuous acquisition of a local online search provider called Switchboard for $160 million in cash may be a harbinger of an impending domino sequence in the local search market and the search engine industry in general."

Intriguing theory...
Consider Metacrawler and Dogpile. Currently, these metasearch properties are significant sources of revenue for several of Google's competitors, including LookSmart, FindWhat, and Overture. By acquiring these, Google could reduce the number of paid links in Metacrawler results, especially those emanating from competitors' keyword ad networks, while taking out a bigger share of that ad revenue pie for itself. This was the same strategy used when Google acquired Applied Semantics, whose DomainSense keyword listings were a major source of revenue for Overture and FindWhat.

If ballpark valuations of Google in the range of $14 billion are accurate, then Google is worth about a dozen times more than Infospace, at least on paper. Sure, Google could raise some IPO cash and then offer Infospace a cash-plus-stock deal they couldn't refuse. But I like the idea of Google and Infospace throwing us a curveball and cooking up a reverse-takeover scheme, leaving Infospace shareholders with a fair but relatively small proportion of shares in a new public company called Google. I'm not sure a reverse takeover on that scale is even legal. But Google taking the back-door route to going public would certainly confound and infuriate the bankers, the press, and the public, who have already speculated to the nth degree about a traditional IPO for Google. Some have even dreamt up bizarro scenarios such as a "Dutch auction."