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Google has announced the acquisition of DoubleClick for $3.1 billion in cash. DoubleClick made the headlines when WSJ reported that Microsoft is in talks of buying DoubleClick in order to compete with Google in targeted ads. Then came the news that Google has joined the bidding war and is committed to keep Microsoft away from Double Click. A few days later DoubleClick announced the launch of a digital ad exchange platform where advertisers and publishers could bid on ads. The timing of this launch was perfected in order to increase the valuation of the company.

DoubleClick was founded in 1996 and went through a lot of ups and downs during the dot com days. It was taken private in 2005 by Hellman & Friedman and JMI Equity for $1.1 billion. The valuation for DoubleClick was rumored to be around $2 billion with the company making revenues of around $300 million per annum. A sudden increase of around $1 billion in the rumored valuation price is in part due to Google’s desire to keep Microsoft away from making in roads into anything Search by means of acquisitions. This also tells us that the Youtube acquisition was not a one off event and that Google is not interested in sitting on the pile of cash it has accumulated, but would rather put it to good use.

I certainly don’t believe that Microsoft couldn’t have outbid Google, I think that DoubleClick made a lot of sense with Google because its largest client AOL is also one of the largest clients and partners of Google. Going with Microsoft would have resulted in a potential lose of AOL. So may be they used Microsoft to pump their valuation and then let Google do the rest. Poor ol Microsoft, the once powerful company, that used to erode market share and valuations of others is now being used to increase just that. May be Microsoft really is dead now.

Also see Techcrunch

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