Google has money in the bank and intends to use it to buy up smaller companies that have developed products that are on the projected corporate development path of the search giant.

Google CEO Eric Schmidt finds himself in the enviable position of having about $22 billion lying around gathering dust. He has apparently noticed that a pile of money that large might be better utilized in improving his company, and he has embarked on a buying spree to do just that. In the tech arena, that means finding and snapping up those small start-up companies that have come up with a better part for your mousetrap. To that end, the Google acquisition machine has shifted into high gear, according to a Business Week article.

Schmidt says that his target is to acquire about one company per month, along with their ideas for improving Google’s technology reach and corporate worth. Working closely with Schmidt in this quest is Google’s head of corporate development, David Lawee. Between them, they will ramp up their merger machine from 5 acquisitions in the past two years to 12 in the 12 months, assuming that they are able to find the right combination of ideas and players who are willing make a deal.

As could be expected, Schmidt and Lawee see many of those acquisitions coming in Google’s area of core competency, Web search, although they are considering companies with expertise in search, advertising, and mobile services and would not rule out many other areas of potential interest to the company. Some analysts do not expect them to stray too far from home, though. One example is Sandeep Aggarwal, an analyst at Collins Stewart, who says “Because of increasing pressure from Microsoft (MSFT) and the fact that search is becoming a much larger category, we expect Google to become more acquisitive in the core search areas.”

Google will certainly be looking for more technological tools with which to combat a (slightly) resurgent Microsoft and their Bing, and to further their own enormous lead in the search sector. At the same time, one could reasonably expect them to search for and find companies that will play into their operating system (Android and Chrome) aspirations. As Google’s wings spread to support more business lines than search, anything that is truly shiny may catch their eye. The rest of Silicon Valley should worry…

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Entry was posted on Sunday, November 1st, 2009 at 11:01 am under Google, Internet, Technology, business.

Read more entries by Michael W. Jones.
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