April 1st, 2007:
Microsoft Corporation (Nasdaq: MSFT) will announce on Monday that it has reached an agreement to acquire Digg, Inc. for an undisclosed sum.
The deal has been in the works for several weeks, according to Microsoft spokesman Mario Nette, who noted that, “Digg is a pioneer in crowd sourcing, the Web 2.0 way of discovering what is important to a new generation of technology-friendly consumers. The Digg community is our natural consumer base and this acquisition is a great opportunity to connect with them. We know Digg users are passionate about Microsoft products and we are anxious to engage them through this new channel.”
Stories posted on Digg are submitted by community members, who currently number over 1 million accounts. After a user submits a story, other members read the submission and “Digg” what they like best. If a story receives enough votes, it is promoted to the front page for the millions of visitors to see.
The acquisition of Digg is a significant advance in Microsoft’s promise to improve Live Search as well as an important an important step towards developing social media platforms.
“This deal is not about buying our way into the hearts of a million Digg members; it brings together two important players in the battle to improve the relevance of online content,” said Pierre Calzino, Director of User Feedback at Live Search. “Web users waste too much time searching for what’s important. Microsoft has been involved with this problem for years and Digg has clearly become a factor to be reckoned with.”
“The natural synergies between the two companies are really exciting. Digg has created a user validation model for determining the significance of online content – a system that is almost impossible to manipulate. Combining Digg’s crowd-sourcing methodology and validation infrastructure with Live Search’s leading technology will allow us to remove the last vestiges of SPAM from our search results.”
“Improving Live Search is just the beginning,” Calzino continued, “We see enormous opportunities for electronic voting. Digg’s online voting platform inspires confidence. Add Microsoft’s track record for building secure systems and you can envision the voting system of the 21st Century. No one will have to wonder if the vote could be hacked or stolen. This deal represents the future platform of our Democracy.”
Digg founder Kevin Rose could not be reached for comment, but according to spokesman Morceau De Bouche, he was delighted with the deal. “Microsoft has an enormous tradition of excellence in engineering and we are all excited about the prospect of learning from them. They have set the standards for technology innovation very high and we know we will benefit from their ability to develop innovative applications on-time and on-budget.”
The acquisition of Digg technologies and brand will help Microsoft maximize shareholder value. “We’ve had our eye on Digg for some time,” said Lavage Green, Environmental Communications Director for Spuhn Associates, “Kevin and his team have created a compelling success story by providing a forum for discussing important social issues such as climate change, the impact of globalization and the Xbox versus the Wii without ever doing anything about it. They have effectively created a committee of millions; everyone can agonize over the problem and feel good about being globally aware without being inconvenienced by committing to any quantifiable action. This shows the depth of thinking and skill they will bring to Microsoft. The addition of Digg’s street credibility and perceived expertise to their existing talent will provide the ability to continue not addressing fundamental global issues for another decade – without fear of repercussions.”
Financial terms of the deal have not yet been released, but company sources indicate that the purchase price is somewhere between .1% and .01% of the total market capitalization for Microsoft as of 5/1/2007.
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