Groupon acquires development firm Ludic Labs

As rumors escalate about Groupon's own potential acquisition, the company makes an acquisition that could improve its technology--which is currently very easy for competitors to replicate.

Amid rumors that it's about to be acquired by Google for an arguably ridiculous valuation, daily-deals company Groupon announced today the expansion of a Silicon Valley office and the acquisition of an advertising and commerce company called Ludic Labs. A price was not disclosed; always one for mocking the Valley rumor mill, Groupon CEO Andrew Mason put a "no comment" statement in his company's own press release and called the whole thing "rumors and speculation."

The Palo Alto, Calif.-based office has currently been housing some 25 employees who work on data and mobile development. With the Ludic acquisition and ongoing recruitment efforts, the Chicago-headquartered Groupon plans to expand the office to about 100 people.

This is particularly interesting considering one of the current criticisms of the alleged $5 billion to $6 billion valuation that's being tossed around for Groupon: that it's incredibly easy to replicate the company's basic technology, which offers little that's really new. "$5 billion is an absurd valuation for a company that is in a business with virtually no barriers to entry and is younger than my toddler," Forrester Research analyst Sucharita Mulpuru wrote in a blog post Tuesday that forcefully criticized the alleged Google buy.

Groupon's prior acquisitions have primarily dealt with buying up smaller competitors to expand its geographic reach-- like European "clone" CityDeal .

Ludic Labs CEO Brian Totty will join Groupon as head of engineering. The company's current products will mostly be shut down: Ludic's local checklist site, Diddit, will be shut down entirely, and a business promotion service called Offer Foundry will have some of its technology worked into Groupon.

About the author

Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.


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