Acquisitions have been an important part of Google's strategy during its first decade. dMarc Broadcasting (radio ads) was acquired in 2006 for $102 million; dropped in 2009 for lack of performance (Schonfeld, 2009). Writely was acquired in 2006 and formed the basis for Google Docs offering free document, spreadsheet and presentation and online collaboration. YouTube was acquired in 2006; as of 2010, it had not provided a profit to Google (Lawler, 2010). Postini, a security and compliance company with solutions for online communications, was acquired in 2007; delivery issues in 2009 caused problems for Google (Peacock, 2010). DoubleClick acquisition completed in 2008 after regulatory approval; this has the potential to boost Google's advertising revenue (Schmidt, 2008).
Google's ability to integrate acquired companies into its organization is questionable. The company also has numerous projects in the works, including DROID and Chrome, which require its full attention. Google is well-advised to refrain from introducing additional complexity to the organization until its current programs have demonstrated that they will be successful.
Google's acquisitions thus far have failed (dMarc), are struggling (YouTube), or are unclear in their success (Double Click). Acquisitions can be a successful growth strategy for companies, but Google has not yet demonstrated that it has mastered the intricacies of integrating acquired companies. The company should continue to investigate expanding its market reach with acquisitions, but avoid acquiring companies in market segments where it has no experience and no clear plan for making the acquisition successful.
Lawler, R. (2010, January 14). YouTube could turn a profit in 2010. New TV. Retrieved 25 Feb 2010: