Is This Facebook-CRUSHED Rival Back in the Game?

Technology development firm Betaworks will buy news-sharing website Digg to try and revive a social network that crumbled in the face of the big success of rivals Facebook (NASDAQ:FB) and Twitter. Betaworks will acquire the Digg brand, website, and technology for just about $500,000, according to the Wall Street Journal.

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Betaworks, which competed with several companies in the acquisition bid, intends to fold Digg into, a digital media startup launched by the former in April 2011. None of Digg’s remaining employees will join Betaworks as part of the acquisition.

“We are turning Digg back into a start-up. Low budget, small team, fast cycles,” Betaworks said in a blog post.

Digg had raised $45 million from investors including LinkedIn (NYSE:LNKD) founder Reid Hoffman during its heyday as one of the most promising startups in Silicon Valley. Founded in 2004 as a way for consumers to put together their own collections of online news and content, Digg rose to prominence rather quickly. It was rumored to be in acquisition negotiations with several companies over the years, including with Google (NASDAQ:GOOG) in 2008 for a reported $200 million. However, none of the deals worked out, which was reportedly a huge disappointment to early employees.

Digg was one of the most popular websites by the end of 2008, but trouble started arriving in early 2010 along with the rapid success of Facebook and Twitter. By the end of 2010, Digg’s audience had fallen by more than half, according to comScore. Digg co-founder Kevin Rose, for long a poster child of the company, left to create an incubator called Milk, which was acquired by Google Ventures earlier this year.

In May this year, Social Code, a digital subsidiary of The Washington Post (NYSE:WPO), hired 15 members of Digg’s engineering team, WSJ said.

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