Robert Scoble has a post entitled Riya not recognized by Google where he recommends that Microsoft look into purchasing Riya.com. He writes

I’ve heard many rumors about Riya over the past few weeks. One strong rumor, reported by Om Malik, among others, was that Riya was getting purchased by Google.

I know our M&A guys had met with Riya too and had passed on the deal after negotiations got too expensive (translation someone else had bid more than we were willing to pay). So, I was suprised that during the past few days I had heard that Riya’s deal with Google wasn’t going to happen.

Today Munjal, Riya’s CEO, said on his blog that they were going to continue on as an independent firm and that the rumors are incorrect.

This is actually very good for Microsoft and Yahoo. Why? Cause this team is high quality and the technology is great (I’ve been using the alpha recently and like it a lot).

Now, why doesn’t Microsoft purchase them? Well, I’ve been in contact with our M&A folks. We have a lot of NIH syndrome here cause we have similar technology that our research teams have developed. I’ve seen our photo/face recognition capabilities and they are pretty cool too and, indeed, are better in some areas and not as good in others.

I have a couple of opinions here but mostly it is advice to Robert given that I've been recently involved in acquisition related discussions as part of my day job. My main thought about Google passing on Riya is that I expected this given that they demoed their in-house image recognition software at the Web 2.0 conference. Thus purchasing Riya would primarily be about augmenting their internal development team which reduces the value of the deal to Google.

From a Microsoft perspective, I'd expect to see a bunch of NIH as well. We have folks who are doing quite a lot in the area of improving digital photograph at Microsoft Research. You can read about some of the work in articles like MSR's Life of a Digital Photo or view demos about interesting work in Object class recognition from the Cambridge arm of Microsoft Research. I don't think I've seen anything as cool as the stuff demoed by Riya and Google but we do have some interesting stuff cooking at Microsoft Research nonetheless. 

The problem for Scoble is finding a product team that actually thinks what Riya is doing is valuable enough to make it worth however many tens of millions of dollars the VCs think the company is worth. Simply saying "What they are doing is cool" isn't enough. The folks at MSR face the same problems and the fact that there aren't lots of transitions from cool research demo to Microsoft product shows just how difficult this process can be.