Amazon investing $175 million in Groupon rival

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Updated: December 5, 2010 4:26PM

As Chicago-based daily-deal company Groupon continues negotiating its sale to Google, online retailer Amazon announced Thursday that it is investing $175 million in Groupon's major rival, LivingSocial.

LivingSocial, a Washington, D.C.-based daily-deals site considered Groupon's most successful competitor with more than $1 million in revenues booked each day, will use Amazon's heft to expand.

"To be the biggest player in the local commerce space, there is no one better to work with than Amazon," said LivingSocial CEO Tim O'Shaughnessy.

LivingSocial said it has also received $8 million more in funding from Lightspeed Venture Partners.

LivingSocial started offering daily deals about eight months after Groupon pioneered its site. LivingSocial started as a network that let people easily share their favorite books, restaurants, spas or social discoveries.

As the daily-deal business model heats up, the companies using it are offering other services. LivingSocial recently launched sites to help people save money on college campuses and on vacations.

Spokespeople for Groupon and Google continued to have no comment on Thursday about their negotiations, in which Google is reported to be offering up to $6 billion - in what would be its largest acquisition - to buy Groupon.