All Things Digital

“Completely inaccurate” does not even begin to get to the heart of the problem, but we’ll get to that later.

First, let’s see if we can sort this latest rumor about the acquisition fever wafting around the popular Digg news site, published by TechCrunch last week.

Its take: That Digg has been pitching itself for sale using bankers from Allen & Co. and was poised to receive high-priced bids from archrivals Microsoft (MSFT) and Google (GOOG), and also had interest from two unnamed major media companies (a good guess here would be CBS and News Corp., owner of Dow Jones, which owns this site).

How exciting! How dramatic! How gripping!

And: How untrue!

That’s because once you actually take time to do actual reporting, you find the story is quite a bit less exciting and dramatic and gripping–pretty much nothing more than part of the typical sniffing and circling that goes on constantly in Silicon Valley.

Here’s what my many and varied sources close to all the companies involved told me, related specifically to the TechCrunch report: Digg is not going around hawking itself, but using bankers to handle interest it receives fairly regularly; and neither Google nor Microsoft is poised to make a bid hovering around $200 million (in fact, most every possible acquirer I spoke to said $60 million to $80 million was a more likely price if Digg were ever sold).

This is not to say that Digg could not suddenly get an amazing offer too good to refuse, from any of the parties and others, as any company could.

And Google is a natural bidder and has to be interested in Digg, of course, given that it needs to add more to its Google News product and likes highly distributed plays like Digg.

In addition, given that it did a guaranteed ad deal with Digg last year and might have to have alternatives if its Yahoo bid fails, Microsoft is the other obvious candidate to own a site like Digg.

But, once again (these Digg sale rumors surface with wearying regularity, much like the colds I get from my kids), Digg is not embroiled in this fantastic kind of Spy-vs.-Spy battle between Google and Microsoft, news of which rocketed around the Web and took on a life of its own.

In other words: While Digg has been to visit the Googleplex and Microsoft to discuss all sorts of linkups, including recently, along with several others over the last two years (Yahoo, for example), from partnerships to traffic deals that could–of course–all lead to a possible acquisition, its executives have not been waiting by the fax machine for offer bids to start rolling in of late.

Here’s the duller truth, in contrast to sexier rumormongering: Of course, larger companies are interested in high-growth Internet phenoms like Digg, whose massive distribution on the Web via Digg buttons and a motivated audience is impressive.

The user-generated news-discovery site that has grown quickly to 27 million unique monthly visitors and 250 million page views is poised to be profitable this year.

While some debate its helpfulness at generating monetizable traffic, when Digg points to a story, huge audience spikes quickly follow.

That’s attracted attention from larger companies, from both the Web and media worlds, all of whom have been calling the still-small start-up (50 employees) for a getting-to-know-you chat.

“Everyone is looking to see if they can copy Digg, partner with Digg, acquire Digg,” said one person familiar with the company.

That has been both a blessing and a distraction to the company, I would imagine, as it takes the eye off the ball of actual executing on a day-to-day basis. As I have seen with a lot of companies I have covered, acquisition interest can be a heady experience and not always in a good way.

And there have been some actual offers to buy Digg over time, although not recently, and none has reached even close to the kind of fire-alarm state that TechCrunch loudly rang last week.

The report was so over the top that it prompted Digg CEO Jay Adelson to refute it on the company’s blog.

He wrote: “Normally our policy is to not comment about things like this, but this morning’s rumors about a bidding war involving Google and Microsoft have created such a stir we feel compelled to tell you all directly that they are completely inaccurate.

“Sorry to burst any drama theories, but they aren’t true. We remain focused on improving Digg and rolling out great features.”

Of course, that was not enough of a denial for TechCrunch, which stood by its source, and then spun a somewhat convoluted conspiracy theory about Adelson’s post: “Digg may have had an angry Microsoft and Google on its hands this morning after this post, leading Jay to comment on this where they usually wouldn’t. Jay certainly wouldn’t say anything untrue in his post, but there’s a lot he isn’t saying in that post, too.”

But that’s kind of like trotting out the old when-did-you-stop- beating-your-wife courtroom ploy. Quick, Della, parachute in Perry Mason to get Adelson to confess to his alleged crime!

Sure, Adelson could have been even more specific, denying Digg was for sale completely and once and for all, I guess. But no public or private company would ever do such a imbecilic thing, as everyone is ultimately for sale, and saying otherwise would have also been completely inaccurate.

And, it goes without saying, no one wants to be completely inaccurate, do they?

Please see this disclosure related to me and Google.