Google's cupcake princess, Marissa Mayer, and Kevin Rose, the playboy of the Webhead world, would make an awfully cute couple. Not romantically — the two are dating other people at the moment. But we hear Mayer is pushing hard for an acquisition of Rose's Digg, for a price below $200 million. Kara Swisher hinted a few days ago that the social news site, on which users "digg" or "bury" their favorite news headlines, might be on Google's shopping list. Mayer's goal: to use what Digg has learned to fix Google News which, while popular, doesn't make Google any money. (Digg CEO Jay Adelson would not comment on the sale rumor, but did disclose that he was having a "delicious" In 'N' Out burger for lunch.)
What's interesting is the timing. A source familiar with the talks says Google and Digg reached an agreement last month; it's not clear whether the offer was verbal or a formal termsheet. So why the delay? One possibility: Digg may have been exploring whether it could hire a rock-star CEO and raise more money. Adelson has long been flying cross-country, twice a month, to San Francisco from his upstate New York home, and privately complains about the commute to friends. But so far, I've heard nothing about Digg raising a new venture-capital round, or Adelson making way for a higher-profile hire.
Of Digg's possible acquirers, Google is the company's most natural home — despite Digg having a multiyear advertising contract with Microsoft. Google desperately wants to get a handle on social networking; it has struggled to sell ads profitably on News Corp.'s MySpace. More importantly, Digg could help Google improve the relevancy of its search results, especially with the news articles Digg readers vote on and discuss so vociferously. That might be worth more to Google than any ads it might manage to sell on the site.
The deal may not happen. Insiders are already mystified by its lack of progress since word first started spreading last month. As Sarah Lacy revealed in Once You're Lucky, Twice You're Good, Digg has held a series of deal discussions that never came to fruition. That history makes it hard to take any new Digg-sale rumor seriously. But we hear these discussions are close enough to take seriously. Cupcakes, anyone?