Google, Microsoft rumored among bidders for Digg

The latest unofficial news has Microsoft, Google and two other, unnamed media companies seriously interested in buying the community-based news site Digg. Though rumors about a sale have been around for nearly two years, a source close to the deal says the four companies are in serious talks with Digg, according to Friday’s report. It is believed Digg will sell for significantly less than the $300 million representative bank Allen & Co. had asked for in 2007.

The same source reveals Google is likely to offer up to $225 million. Last year’s three-year advertising deal between Microsoft and Digg gives the latter company more flexibility in holding out for better offers. Microsoft is unlikely to concede the sale to Google, spurring a possible bidding war. This is especially likely since there are two other wildcards involved.

Digg’s success story is a relatively short one. The site was started late in 2004, then exploded early in 2005 when a user posted a link to Paris Hilton’s hacked cell phone information on Digg, resulting in a surge of traffic and making Rose realize the potential of his creation. Since its inception, Digg has raised $11.3 million.

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