According to Tech Crunch, Google and Digg have signed a letter of intent and are close to a deal whereby Google will buy Digg, and bring it under its Google News arm, for around $200 million.

Among other things, this may help solve two issues for Google:

1. Digg will give Google News a big boost – which, according to some, has failed to reach its potential in terms of popularity and, to date, hasn’t had a revenue model (see http://www.kikabink.com/news/46/is-google-news-a-dog/).
2. Google can take the Digg-like voting technology its currently testing for its search engine results straight from the source.

Having said all this, the deal could still be derailed. Who knows, Microsoft might wish to intervene, either by offering a higher price or, as Tech Crunch has suggested, offer a much lower price if Google pulls out of the acquisition.

Source: Michael Arrington, “Google In Final Negotiations To Acquire Digg For ‘Around $200 Million’”, Tech Crunch, July 22, 2008

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