Rumor: Google to buy Digg for $200 million?

Rumors of a Digg acquisition by Google have been on and off for some time now. But according to sources, the two have signed a letter of intent and are finally nearing a deal whereby the search giant would pay a sum in the range of $200 million to bring the popular news aggregation site under the Google News property.

Interestingly, a large piece of Digg’s cash flow comes from a three year ad deal with Microsoft – a deal which would presumably end or be threatened if Google acquired the company. The real question is what would Google do with Digg? The search giant has been known to be experimenting with user-voted search results, but some suggest Google might just leave Digg as a standalone property – like YouTube – and strengthen its already solid search-advertising lead through the site.