Thalasar Ventures

Google just bought Doubleclick for 3.1 Billion in cash. What’s striking about this offer is that it beats Microsoft’s 2 billion dollar handily.

This gives Google a huge chunk of the market for display advertising on the web. More importantly it keeps Doubleclick out of the hands of Microsoft. Microsoft acquiring Doubleclick would have shut Google out of the display ads business. As it is now Microsoft must play catch up.

DoubleClick’s chief executive, David Rosenblatt, said a few weeks ago that a new system it had developed for the buying and selling of online ads would probably become the chief money maker within five years. The system, a Nasdaq-like exchange for online ads, brings Web publishers and advertising buyers together on a Web site where they can participate in auctions for ad space.

This marketplace combined with Google existing power in the search ad market means a big win for Google. The real question of course, is why Microsoft with it’s enormous cash reserves allowed itself to be out bid in this way. It cannot be that they think they can duplicate Double Click for less 3 billion dollars can it? Doubleclick has been a player for so long and is so well entrenched that’s hard to imagine they could even build the infrastructure for that price.