Google acquires VOIP start-up Gizmo5, could challenge Skype

Internet giant Google has been on the prowl, acquiring one mobile advertising business in a multi-million deal, while reportedly buying another tech company that could help the search giant position itself as a potential competitor to VoIP service Skype.

According to industry blog TechCrunch, Google has acquired VoIP start-up Gizmo5 for about $US30 million in a deal soon to be announced by the two companies.

The deal comes after Skype successfully negotiated a deal with its former owners that would see the company maintain full possession of the technology it requires to operate.

Gizmo5, operated by dotcom entrepreneur Michael Robertson, was reportedly in discussions with Skype about a potential acquisition should the company lose its legal battle with its former founders. But as Skype no longer requires Gizmo5 as a potential back-up plan, the company was free for purchase.

The deal has subsequently led analysts to believe Google may be setting itself up as a VoIP provider to rival Skype, which holds the vast majority of the market and accounts for 8% of all international voice traffic.

While Google already offers a feature for users to speak over the internet, it does not have the ability to make incoming or outbound calls to “real” telephones – a service Gizmo5 has already established.

Additionally, Gizmo5 has already been integrated with Google Voice, the company’s program that replaces a user’s telephone numbers with a single number for all devices. These services combined would place Google in a position to compete with Skype.

Gizmo5 was founded in 2003 by Robertson, who obtained notoriety during the dotcom era for founding controversial music site MP3.com

Meanwhile, Google has also acquired mobile advertising platform AdMob, which predominantly offers advertisements on the iPhone, for $US750 million.

Google says it acquired the company in order to spread its mobile search ads to other platforms, as AdMob advertisements appear in a variety of different formats that Google has yet to develop.

“For publishers of mobile websites and applications, this deal will mean better products and tools and more effective monetisation of their content – allowing them to focus more on their users and less on how to generate revenue,” it said in a blog post.

“For advertisers who want to reach users when they are engaged with mobile content, this deal will bring better, more relevant ads and greater reach. It will also mean more interesting, engaging ad formats.”
Hamoui also said the company will be able to increase the spread of its ads by working with the Google sales team.

“After our deal closes, AdMob will work with Google to accelerate the pace of innovation in mobile and do an even better job for you. We believe this deal will benefit our advertisers, developers and publishers by… increasing our investment in building innovative and engaging ad units across platforms and to further improve targeting and tracking.”