Google to Launch Groupon Competitor

Search engine giant Google Inc. is preparing a rival to coupon website Groupon, technology website Mashable reported late Thursday.

Social news website obtained a prototype of what Google Offers will look like. Photo: Google

Google Inc., after failing to acquire daily-deals website Groupon Inc., said it is preparing to test a competing service that offers deals to local businesses such as restaurants, according to the

The Internet search giant, which on Thursday also said that co-founder Larry Page would take over as chief executive from Eric Schmidt, didn’t release details about the new effort – named Google Offers – that aims to grab a larger share of the small but growing online-ad market for local businesses.

One of Mashable’s sources has sent the website a confidential fact sheet straight from the Googleplex about the company’s new group buying service. “Google Offers is a new product to help potential customers and clientele find great deals in their area through a daily email,” the fact sheet says.

“Google Offers looks and operates much like Groupon or LivingSocial. Users receive an e-mail with a local deal of the day. They then have the opportunity to buy that deal within a specific time limit (we assume 24 hours),” writes Mashable’s Ben Parr.

“Once enough people have made the purchase, the Google Offer is triggered and users get that all-too-familiar $10 for $20 deal for that Indian restaurant they’ve never tried.”

The paper cited an unnamed source who said that Google Offers is being led in part by Stephanie Tilenius, head of e-commerce at Google, and that the company is working on ways for customers to pay for their purchases using their cell phones.

Powered by Google Checkouts, Google Offers will also have sharing options to allow people to spread the word via email, Google Reader, Google Buzz, and the usual social network-y suspects.

“The search giant clearly isn’t giving this market up without a fight, though. With its vast reach, huge resources and brand recognition, it could prove to be a powerful player in the space,” writes  Ben Parr. “We’re going to be watching these developments closely. We’ve reached out to Google for comment.”

Responding to Mashable’s story, Google spokesman Nate Tyler told the Wall Street Journal that the company is “communicating with small businesses to enlist their support and participation in a test of a prepaid offers/vouchers program.”

“This initiative is part of an ongoing effort at Google to make new products … that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted.”

Mashable also learned that “Google will pay out 80% of a business’ revenue share three days after its deal runs. Google will hold the remaining 20% for 60 days to cover refunds before sending the rest.”

The move comes after Groupon spurned a reported $6 billion buyout offer from Google in December last year. Reports last week said that Groupon is pushing ahead with plans for an IPO that value the company at about $15 billion. [via Mashable]

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