Google loses executive to Groupon, preps rival service

SAN FRANCISCO Fri Apr 22, 2011 8:13am EDT

An online coupon sent via email from Groupon is pictured on a laptop screen November 29, 2010 in Los Angeles. REUTERS/Fred Prouser

An online coupon sent via email from Groupon is pictured on a laptop screen November 29, 2010 in Los Angeles.

Credit: Reuters/Fred Prouser

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SAN FRANCISCO (Reuters) - Online coupon service Groupon has hired a Google executive to be its new chief operating officer, as Google began rolling out a new service aimed directly at Groupon's thriving business.

The hiring and roll-out come as Groupon and Google increasingly go head-to-head in the vast market for local advertising, with each company pitching its online marketing services to small businesses such a restaurants and nail salons.

Google, the world's No. 1 Internet search engine, tried to acquire Groupon for $6 billion in December, but was rebuffed, according to a source familiar with the matter.

On Thursday, Google began running ads on several websites inviting consumers in Portland, Oregon, to sign up for a new service dubbed Google Offers.

Google Offers will allow consumers "to get great deals delivered right to their inboxes," a Google spokeswoman said in a statement.

The popularity of so-called daily deals services has surged since Groupon launched less than three years ago. The privately held company does not disclose its financials, but says it has been profitable since June 2009.

Also on Thursday, Groupon announced that Margo Georgiadis, vice president of global sales operations at Google, will become COO at Chicago-based Groupon, overseeing the company's global sales, marketing and operations.

The hiring of Georgiadis comes a month after the current COO said he would step down. It fills a key slot in Groupon's management team ahead of a potential initial public offering.

Groupon, which recently raised $950 million from investors including Andreessen Horowitz, Battery Ventures, Greylock Partners and Kleiner Perkins Caufield & Byers, has met with bankers to discuss a possible IPO, CEO Andrew Mason told Reuters in January.

Georgiadis represents the second high-level executive Groupon has poached from Google in recent months. In February, Groupon hired Google's Jason Harinstein, a director on the search company's mergers and acquisitions team, to serve as its senior vice president of corporate development.

Nikesh Arora, Google senior vice president and chief business officer, said in an emailed statement to Reuters that he was excited that Georgiadis was joining "a terrific company and a great partner for Google."

The online coupon and group-buying market, in which consumers are offered daily deals promising big savings at local merchants, is among the fastest-growing sectors of Web commerce. In December, Amazon.com Inc invested $175 million in start-up LivingSocial, which has said it expects to generate more than $500 million in revenue this year.

Google plans to test its new Offers service in Portland first, followed by New York and the San Francisco Bay Area, though the company declined to provide a timeframe for when the service would launch in any of the markets.

Groupon, which ended 2009 with 1.8 million subscribers, signed up 50 million by the start of 2011 and now has more than 70 million users in 500 markets in 45 countries.

Georgiadis had been with Google for two years and was based in its Chicago office. Groupon's previous COO and president, Rob Solomon, said in March that he planned to leave the company in the coming months.

(Reporting by Alexei Oreskovic; additional reporting by Jennifer Saba; editing by Maureen Bavdek, Gary Hill)

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