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Google reportedly in talks to buy mobile ad startup InMobi

It's unknown why Google is interested in InMobi in particular; what is clear is that Google needs to bolster its efforts in mobile advertising.

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InMobi works cross-platform, including with iOS, Android and Windows Phone operating systems. InMobi

Google is looking to bolster its business in mobile ads with the possible acquisition of an India-based startup, according to a report.

Google is currently holding acquisition talks with InMobi, the India Times reported Tuesday, citing people who claim to have knowledge of the discussions. Those talks have entered the diligence phase, which allows Google to look more deeply into the business to analyze its operation. That phase can make or break an acquisition.

Neither Google nor InMobi immediately responded to a request for comment.

InMobi is one of a growing number of prominent startups in India. The company, which was founded in 2007, initially began as a mobile search company under a different name: mKoj. The co-founders quickly changed tack, swapped in a new company name and went after mobile ads. The service now supplies mobile ads from companies to consumers on a range of devices with iOS, Android, and Windows Phone operating systems. According to InMobi, it enables 138 billion ad impressions worldwide each month and targets 1 billion active users monthly.

It's unclear why InMobi is so attractive to Google, but what is known is that Google needs to bolster its offerings in mobile ads. While worldwide ad spending is still dominated by traditional online and search ads -- a space where Google reigns supreme -- mobile advertising is set to grow exponentially in the coming years.

According to research firm eMarketer, which tracks worldwide ad spending, mobile ad spending in just the top five highest-spending countries -- the US, Japan, China, Germany, and the UK -- reached $40.2 billion last year. By 2018, that figure is expected to grow to $159 billion.

Meanwhile, Google's market share is slipping in mobile ads. In 2012, the company owned 52.6 percent of the space, compared with Facebook's 5.4 percent share. Last year, eMarketer forecast that Google would end 2014 with 46.8 percent share compared with Facebook's 21.7 percent.

A key component in Facebook's growth has been its focus over the last few years on being a "mobile first" company. Indeed, the company announced in January that overall ad revenue was up 53 percent year over year to $3.6 billion in the fourth quarter and that mobile ads accounted for 69 percent of that figure.

Given the expected growth in mobile ads and Facebook's heavy reliance on that arena, the social network seems poised to capitalize. Google, which acquired mobile-ad company AdMob in 2009, is still heavily reliant on search and display ads.

According to the India Times, Google approached InMobi to acquire the company back in September, but talks broke down. Now, it's back to the table. But exactly how much Google will be willing to pay remains to be seen. InMobi last year was reportedly seeking a new venture round based on a $2 billion valuation. Those talks eventually ended after investors were only offering a $1.5 billion to $1.8 billion valuation.

If Google finalizes the acquisition, it would be at least the second major US company this year to pick up a mobile startup in India. In January, Twitter acquire ZipDial, an India-based startup that provides targeted marketing to India consumers who don't have ready access to data networks.