Google closes in on Digg

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Google is on the verge of snapping up news aggregator Digg for a reported US$200m as the search giant continues to bolster its news service.

Reports claim that the acquisition is a couple of weeks from completion, although a third party such as Microsoft could still move in should the deal fall through.

Google and Digg have reportedly signed a letter of intent following an on/off negotiation process which continued despite Google's cooling on the acquisition.

News of the likely deal surfaced after images appeared on websites last week suggesting that Google was experimenting with Digg-style voting methods as a means of aggregating search results.

Digg was launched in November 2004 by a group of young entrepreneurs in the US and is one of the best-known news aggregators. The service competes with other high profile community aggregators such as Slashdot and Reddit.

Should the acquisition go ahead it is likely that Digg's three-year advertising deal with Microsoft, which accounts for most of the company's revenue, would be terminated.
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