Digg has been publicly on the lookout for a buyer for quite sometime now with a reported $300 million price tag. IAC, once rumoured to be acquiring Digg, is said to now be working together with the company on a white label solution with their search property Ask.com. Silicon Alley and ParisLemon reported on the rumour earlier.
“I’ve seen it, and it looks great,” Silicon Alley Insider quotes a correspondent. If IAC is working on a user generated content system with Digg, it would have to be in response to AOL’s Propeller, which, while not the market leader, stands as a second or third to Digg and must drive a fair amount of pageviews to AOL’s online empire.
IAC has a strong portfolio in acquiring and working on new web services, and the partnership with Digg — if true — would be a good test in their search for new markets to capitalize in the emergence of Web 2.0. Additionally, Digg has a pageview model which would fit nicely with Ask.com. The company has also once been a sponsor of the related online video podcast Diggnation, which leaves another floating point for rumorists to ponder.
For Digg, which has long been seeking a buyer, it could be that the partnership is a stepping stone of a future acquisition. That said, it might not make sense to be building a separate white-label property now when you’re planning to buy the company itself in a few months. Also, partnering with a competitor of other potential buyers — namely Google, Yahoo!, Microsoft and AOL — might not be the best idea at this stage since it may be the show-stopper of a possible acquisition.
We’ll be sure to keep you posted on the rumor.