In 2011 Google Spent $1.9 Billion Acquiring 79 Companies

To save someone else a few seconds with a calculator, that's an average of just over 24 million per acquisition. Not that each was acquired for an equal amount.

Here's why acq-hiring is a disaster. Let's say FatFrog is the acquirer and BuzzFly is the acquired.<p>BuzzFly's founders usually have earnouts ("golden handcuffs") and thus have an incentive to stay, but merging them with FatFrog's executive hierarchy is difficult and rocky. They tend to be resented, especially if there's an age difference (i.e. the BuzzFly founders are 25 and FatFrog execs are 40+). The executive merging is difficult in acq-hires because no one will take orders from a 26-year-old whose IUsedThisToilet virtual bathroom graffiti app just got bought for $87 million.<p>BuzzFly's top programmers, who are by this point the vitality of the organization, don't have the huge amounts of stock that would be incentive to stay. Their company also just got acquired so this is a <i>great</i> time to go for a major external promotion, especially since titles in a soon-to-be-eaten company are pretty easy to self-upgrade. So the top engineers face the "decision" between (a) use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company, or (b) become some subordinate Software Engineer, Level 4.B.ii at FatFrog while watching their original work (whatever remains of BuzzFly) goes into maintenance mode... and has to be rewritten in C++.<p>The weakest engineers, who never could have gotten jobs at FatFrog, but were able to get onto the BuzzFly train when Buzz was desperate, stay along.<p>So the actual result of an acq-hire is that the execs are rejected like a bad transplant, the best engineers bolt, and the worst ones stay on board.

And yet that $1.9B is only a fraction of Google's cash reserves. And Apple's is nearly $100B. Corporations are hoarding cash at record levels. As of last January, the top 17 US corporate cash reserves amounted to nearly half a <i>trillion</i> dollars. It's not unreasonable to speculate that corporate hoarding is contributing to our flat economy, when you consider how that cash would be multiplied if it were turned loose. Companies are holding onto cash because they're afraid of slow growth because of high unemployment, which becomes a self-fulfilling prophecy when they don't invest in new business and hire more people.<p>It also casts doubt on claims that raising corporate taxes will hurt the economy. If companies aren't spending any of the cash they already have, how will giving them more to stuff under the mattress help?

And that's only counting the acquisitions that closed...

I don't think this will continue into 2012, with the way Larry is focusing on the core products.

It also spent spent $9.7 million on lobbying in 2011 (<a href="http://wapo.st/yanxMo" rel="nofollow">http://wapo.st/yanxMo</a>) The powerful is getting even more powerful. Next stop 'too big to fail'.

2011 was the year that Google gobbled up drop.io, and buried it deep in the room known as "Stuff We'll Never Use, And Neither Will Anyone Else".<p>NOTE TO SELF: Startup Idea: Create a new drop.io, and combine it with some of the features of MegaUpload. Call it MegaDrop.