Google’s Acquisition Engine: An Inside Look

(Reuters) – In the fast-paced world of Silicon Valley innovation, Google’s chief dealmaker David Lawee puts many a youthful engineer to shame.

As head of Google’s M&A group, he has powered up the search giant’s acquisition machine and his team is on track to nail down a deal every two weeks on average, in Google’s most deal-heavy year ever.

But Lawee, 44, who is Vice President of Corporate Development, isn’t about to sit back, as Google isn’t the only predator on the prowl in the business. It regularly faces off against rivals from Apple Inc to Microsoft Corp on the acquisition front.

"In almost every deal that we look at, there’s always someone or one of those companies interested," Lawee told Reuters in an interview, referring to a half-dozen rivals that also include Cisco Systems, Amazon.com Inc and eBay.

His comments come as tech M&A picks up, with companies like Hewlett-Packard Co, IBM Corp and Intel Corp all announcing billion-dollar-plus deals in past weeks.

Google chief executive Eric Schmidt had told analysts to expect about one deal a month as 2010 got underway. Lawee’s team has shot past that target with deals emphasizing video, mobile and social networking companies.

For Google, whose Internet search business is facing new threats from social networking sites like Facebook and smartphone powers like Apple, acquisitions are important for grabbing expertise or customers in important markets.

They have provided the foundation to many of Google’s most popular products, from the Android smartphone operating system and Google Maps to the YouTube video site.

"PAYING OFF HUGE"

Lawee said that the bets Google made in past years are "paying off huge" though some argue the acquisitions have yet to provide a meaningful contribution to Google’s profit or its nearly $24 billion in annual revenue,

"How much do you think we would sell Android for today? I would argue it would be in the billions and billions of dollars, it’s worth a lot of money. The same of YouTube," he said.

Lawee, a native of Montreal, Canada, who holds degrees in law and philosophy, has seen deals from many sides of the table. He co-founded online gaming company Xfire, sold to Viacom in 2006, and has also worked as a venture capitalist.

Before taking over Google’s M&A group in 2008, he managed its consumer, advertiser and partner marketing.

His present role as Google’s head of M&A has come as the Internet search giant faces increasing regulatory scrutiny.

Antitrust regulators spent months reviewing Google’s acquisition of AdMob before giving it the green light, and regulators are currently examining Google’s plans to buy online travel software company ITA Software for $700 million.