Google Smells Facebook Blood, Buys Wildfire

NEW YORK (TheStreet) - One of the things I have always embraced is the idea that the most successful investors are the ones who remain in a state of perpetual worry.

Meaning they are always paying attention while taking nothing for granted. Call it paranoia, but these are the type of investors where due diligence never escapes.

With this sort of mindset, they tend to invest in companies that model their personalities -- companies such as Apple ( AAPL) and Amazon ( AMZN) that are always pushing buttons and never resting on their laurels. It's hard to find such companies outside of the tech sector, a known cutthroat industry where rivals love nothing more than to put each other out of business.

This became evident when search giant Google ( GOOG) announced it has acquired Wildfire, a company that specializes in social media marketing.

What is clear in this deal is that Google smells fear in the air and sees blood in the water, both thanks to its chief social media rival Facebook ( FB). Google seems determined not to let up the pressure of its foot on Facebook's neck.

The competition has now become intensified. After Apple ditched Google maps from its mobile devices in favor of its own in-house mapping program, Apple also angered Google by supporting Facebook, integrating the app into its soon-to-be-released IOS6 -- seemingly to put a dent in Google+, Facebook's main competitor from the standpoint of ad revenue.

So without question, Google's acquisition of Wildfire is a way to better leverage and monetize its current 250 million Google+ users while also seeking to draw more attention from advertisers. Although financial details of the deal have not officially been disclosed, sources say that it is estimated to be $250 million, although recent reports have suggested it could be worth as much as $400 million.

I think this is a deal that Google had to make, one that continues a recent pattern of social media acquisitions from Oracle ( ORCL) as well as Salesforce.com ( CRM).

The question is, will this deal generate the return that Google expects and will it help its Google+ platform gain the level of traction necessary to truly put a dent into Facebook?

Google often appears to operate with a chip on its shoulder and seems unsatisfied as it seeks to be everything its chief rival Apple is credited with being. While the company plays second fiddle to nobody, sometimes I believe Google maneuvers with the mindset of a startup by constantly seeking to expand its circle of competence to compete with Apple and now with Facebook.

What is clear is that Google understands what it is dealing with, and perhaps its rivals don't.

Also, the company is positioning itself to be the formidable adversary it needs to be for its own survival. What's more, don't discount that its Nexus 7 tablet and the possibility of creating its own phone via its Motorola ( MMI) ownership could have also inspired this deal.

While Facebook's main challenge (among others) continues to be monetizing mobile, Google seems poised to show Facebook as well as the entire market how it's done.

At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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